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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:
It is recommended that the Board 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. 2017-22, on May 26, 27, 28, 29 and 30, 2017, the Solano County Treasurer/Tax Collector/County Clerk (“Tax Collector”) conducted a public auction of tax-defaulted properties on the internet. A Public Auction Re-offer was made on unsold properties on June 21, 2017. After the properties were sold, the delinquent taxes, interest, penalties and statutory administrative costs for the sale of the property were paid from the proceeds. The remaining sums are deemed excess proceeds.
The Tax Collector is entitled to make a claim for statutorily authorized actual costs related to notice for claims for the distribution of excess proceeds pursuant to the Revenue and Taxation Code prior to the payment of claims against the excess proceeds. All other persons with an interest in the properties have one year from the recording of the tax deed 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 authorized costs and all creditors with valid claims have been paid.
Five (5) parcels were sold at the auctions. The Tax Collector received proceeds totaling $619.40 in excess of the sums owed the Tax Collector on all of the parcels sold and received claims for excess proceeds on one (1) of the parcels. The requested action authorizes distribution of the excess proceed funds according to statutory priority and the resolution.
FINANCIAL IMPACT:
The County received all of its taxes, penalties, interest, and administrative costs for the sale of the defaulted parcels. Excess proceeds following payment of statutory authorized costs and fees totaled $619.40.
The reimbursement of $521.94 for the Tax Collector’s statutorily authorized pre-claim administrative costs is unanticipated revenue that will be recorded in its FY2018/19 budget. The Tax Collector was not able to recover $106.42 of the costs authorized to be recovered from excess proceeds prior to the payment of any claims, and $253.12 of its administrative costs which is authorized to be deducted from any residual proceeds remaining after the payment of allowed claims.
The County General Fund shall receive $97.46 from the excess proceeds of three parcels. The County is entitled to claim the residual amount because claims were not made on these parcels and there were no administrative costs incurred by the Tax Collectors regarding claims for those parcels.
DISCUSSION:
Revenue and Taxation Code 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 sections 4671-4676. Revenue and Taxation Code section 4676(d) provides that the Tax Collector may recover actual costs related to research, mailing and publication of notices for to persons who may have a right to a claim against the excess proceeds. 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 venerable 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 0051-190-160
The excess proceeds amount to $8.02. No party submitted a claim for the excess proceeds on the parcel. There are no Tax Collector administrative costs on the parcel. The County of Solano is entitled to the residual amount of $8.02.
2. APN 0054-183-080
The excess proceeds amount to $29.36. No party submitted a claim for the excess proceeds on the parcel. There are no Tax Collector administrative costs on the parcel. The County of Solano is entitled to the residual amount of $29.36.
3. APN 0055-101-250
The excess proceeds amount to $60.08. No party submitted a claim for the excess proceeds on the parcel. There are no Tax Collector administrative costs on the parcel. The County of Solano is entitled to the residual amount of $60.08.
4. APN 0062-112-060
The excess proceeds amount to $237.62. No party submitted a claim for the excess proceeds on the parcel. After the Tax Collector recovers $237.62 of its $250.12 in administrative costs for research and notice to claimants, there are no funds remaining to transfer to the County of Solano.
5. APN 0106-220-460
The excess proceeds amount to $284.32. There is one legitimate claimant, the former owner of the parcel, Agape Villages, Inc., a Foster Family Agency, by and through its president, Janet Kleyn. After the Tax Collector recovers $284.32 of its $378.24 in administrative costs for research and notice to claimants, there are no excess proceeds to disburse to the claimant. The claimant has been notified of the determination 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