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Adopt a resolution accepting claims for excess proceeds from tax-defaulted property sales and authorizing distribution of excess proceeds from the sales
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Published Notice Required? Yes ___ No _X _
Public Hearing Required? Yes ___ No _X _
DEPARTMENTAL RECOMMENDATION:
The Office of County Counsel recommends the Board of Supervisors adopt a resolution accepting claims for excess proceeds from tax-defaulted property sales and authorizing distribution of excess proceeds from the sales.
SUMMARY:
Pursuant to Board of Supervisors’ Resolution No. 2022-21, on May 10-12, 2022 and June 15-16, 2022, the Solano County Treasurer/Tax Collector/County Clerk (“Tax Collector”) conducted a public auction of tax-defaulted properties on the internet. After the properties were sold, the delinquent taxes, interest, penalties and statutory administrative costs were paid from the proceeds. The remaining sums are deemed excess proceeds. The Tax Collector is entitled to make a claim for the actual costs related to the distribution of excess proceeds and pursuant to the Revenue and Taxation Code; all other persons with an interest in the properties have one year in which to file a claim for excess proceeds from the sale. The former owner of a property can make a claim for any residual amount, after the Tax Collector has been paid its costs and all creditors with valid claims have been paid.
Ten (10) parcels were sold at the auction. The Tax Collector received proceeds in excess of the sums owed the Tax Collector on eight (8) of the parcels sold and received claims for excess proceeds on four (4) of the parcels. The requested action authorizes distribution of the excess proceeds funds according to statutory priority and the resolution.
FINANCIAL IMPACT:
The County received all its delinquent taxes, penalties, interest, statutory administrative costs for all ten (10) parcels sold at the auction. However, two (2) of the ten (10) parcels, APN 0051-183-030 and APN 0182-291-020, did not have any remaining sums or “excess proceeds” after said costs were paid.
The Tax Collector made a claim for reimbursement of actual costs from the distribution of excess proceeds on six (6) of the parcels sold. The Tax Collector received all its requested costs, totaling $2,134.80. This is unanticipated revenue that will be recorded in FY2023/24.
In addition, the County General Fund shall receive $412,565.78 from the excess proceeds. The County is entitled to claim the residual amount, either because claims were not made, or an invalid claim was made. [Rev. & Tax. Code, § 4674; First Corporation, Inc. v. County of Santa Clara (1983) 146 Cal.App.3d 841.]
DISCUSSION:
Revenue and Taxation Code (RTC) sections 3692 and 3692.2 authorize the Tax Collector to sell tax-defaulted property on the internet. The disposition of the proceeds from the sales is prescribed in RTC sections 4671-4676. As part of this statutory distribution scheme, section 4675 concerns distribution of excess proceeds.
Section 4675 allows any party of interest in the property to file with the county a claim for excess proceeds at any time prior to the expiration of one year following the recordation of the tax collector’s deed to the purchaser. Upon the expiration of the one year, the excess proceeds may be distributed to claimants on order of the board of supervisors to the parties of interest in the order of priority set forth in the section. The statute further provides in pertinent part:
“… [P]arties of interest and their order of priority are:
(a) First, lienholders of record prior to the recordation of the tax deed to the purchaser in order of their priority.
(b) Second, any person with title of record to all or any portion of the property prior to the recordation of the tax deed to the purchaser.”
In determining priority, lienholder claimants have priority over title of record claimants. As between lienholders, the common law principle of first in time, first in right governs priority, based on the recording date of the lien.
Finally, unless otherwise expressly provided under law, no statutory authority provides for the payment of interest on excess proceeds from the sale of tax-defaulted property. Accordingly, any person awarded excess proceeds is only entitled to receive interest calculated through the date of sale.
The parcels and claims are as follows:
1. APN 0046-340-050
The excess proceeds amount to $48,068.85. No party submitted a claim for the excess proceeds on the parcel. After the Tax Collector recovers its administrative costs on the parcel in the amount of $307.83, the County of Solano is entitled to the residual amount of $47,761.02.
2. APN 0051-040-400
The excess proceeds amount to $32,275.55. Dong Yoo on behalf of the City of Vallejo, Code enforcement submitted a valid and timely lienholder’s claims totaling $1,632.00 based on two (2) notice of lien assessments recorded on the following dates: September 9, 2021, and March 11, 2022. Waqar Khan submitted a timely claim, however the claim did not include any proof of claimant’s right to any portion of excess proceeds. Absent any supporting documentation, Waqar Khan is not able to recover as a former owner of the property or as a “lienholder of record” or under Revenue and Taxation Code § 4675(e)(1). After the Tax Collector recovers its administrative costs on the parcel in the amount of $379.79, the City of Vallejo Code Enforcement is entitled to $1,632.00 and the County of Solano is entitled to the residual amount of $30,263.76.
3. APN 0052-080-090
The excess proceeds amount to $7.00. The Tax Collector did not submit a claim for any administrative costs on the parcel. Thus, the County of Solano is entitled to the residual amount of $7.00.
4. APN 0052-172-010
The excess proceeds amount to $34,236.91. The Tax Collector incurred $343.81 in administrative costs on the parcel. Lina Wardlaw submitted a timely claim for the residual amount based on the Tax Deed, recorded May 20, 2008, which listed GPLC0052-172-010LLC as the purchaser. However, the claimant did not provide proof of authority to make a claim on behalf of the business. Therefore, she cannot recover excess proceeds. The Tax Collector has a right to collect its administrative costs on the parcel in the amount of $343.81 and the County of Solano is entitled to the residual amount of $33,893.10.
5. APN 0055-105-080
The excess proceeds amount to $198,865.72. The Tax Collector incurred $415.75 in administrative costs on the parcel. Murphy Medical Transportation, Inc. filed a valid and timely lienholder’s claim in the amount of $9,131.57, based on a recorded Abstract of Judgment against Peter Heotes recorded on January 4, 2019 ($6,140 judgment, plus $142 in costs, plus interest calculated at 10% per annum pursuant to Code of Civil Procedure § 685.010(a)). Elaine Ercolini filed a timely and valid claim on behalf of Anntraud Heotes for one quarter interest in the residual amount. Cynthia A. Heotes filed timely and valid claims for three quarters interest in the residual amount. The Tax Collector has a right to collect its administrative costs on the parcel in the amount of $415.75. Murphy Medical Transportation, Inc. is entitled to $9,131.57. Anntraud Heotes is entitled to $49,612.49 [1/4 of the residual amount] and Cynthia A. Heotes is entitled to $139,705.91. [3/4 of the residual amount, minus $9,131.57 paid to Murphy Medical Transportation, Inc.].
6. APN 0056-115-040
The excess proceeds amount to $285,076.07. The Tax Collector incurred $379.79 in costs on the parcel. River Denning filed a timely claim on behalf of the Denning River Trust. The Court Order Appointing Trustee, submitted by Claimant in support of a residual claim, does not specifically include this parcel as part of the trust. Therefore, it has been determined that this is not a valid claim. Solano County Department of Child Support Services filed a timely lienholder’s claim for $5,155.27 based on an Abstract of Support Judgment. However, this claim was subsequently withdrawn. After the Tax Collector recovers its administrative costs on the parcel in the amount of $379.79, the County of Solano is entitled to the residual amount of $284,696.28.
7. APN 0062-010-390
The excess proceeds amount to $16,244.45. No party submitted a claim for the excess proceeds on the parcel. After the Tax Collector recovers its administrative costs on the parcel in the amount of $307.83, the County of Solano is entitled to the residual amount of $15,936.62.
8. APN 0062-010-400
The excess proceeds amount to $8.00. No party submitted a claim for the excess proceeds on the parcel. The Tax Collector did not submit a claim for any administrative costs on the parcel. Thus, the County of Solano is entitled to the residual amount of $8.00.
We have notified the claimants of the determinations and the date, time, and location of this hearing.
ALTERNATIVES:
The Board could request further information on this matter.
OTHER AGENCY INVOLVEMENT:
The Tax Collector and the Auditor-Controller were actively involved in receiving the claims and assisting with the determination of distribution.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION