Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2017

Revenue and Taxation Code

Property Taxation

Part 4. Levy of Tax

CHAPTER 2. Effect of Tax

Section 2194

2194. Removal of lien. (a) Except as otherwise provided in this chapter, the judgment is satisfied and the lien removed when, but not before, either of the following occur:

(1) The tax is paid or legally canceled.

(2) The property is sold to satisfy the tax lien.

(b) For purposes of this section, the tax is not deemed paid or legally canceled by virtue of a sale of a tax certificate for that tax pursuant to Section 4521.

History.—Stats. 1984, Ch. 988, in effect September 11, 1984, added "either of the following occur:" after "before" in the first sentence, deleted "or," after "canceled" in subsection (a), and substituted subsection (b) for former subsection (b) which provided "for nonpayment of any taxes, the property is sold to a private purchaser or deeded to the state". Stats. 1995, Ch. 189, in effect July 24, 1995, added subdivision letter designation (a) before first paragraph; renumbered former subdivisions (a) and (b) as (1) and (2), respectively; and added subdivision (b).

Note.—Section 74 of Stats. 1984, Ch. 988, in effect January 1, 1985, provided that (a) Whenever there has been a sale to the state or a deed to the state under the provisions of Division 1 (commencing with Section 101) of the Revenue and Taxation Code on or prior to the effective date of this act, and the right to redeem the property subject to the sale or deed has not been terminated, the sale or deed to the state shall be cancelled as of the effective date of this act. Any such property sold to the state shall be deemed "tax-defaulted" property as of the date of its sale to the state. Any such property deeded to the state shall be deemed "tax-defaulted" property as of the date of its sale to the state and shall be subject to a power of sale for nonpayment of taxes. Simultaneously with the cancellation of any tax deed to the state, the lien for delinquent taxes on the real property shall revive. That lien shall have priority over all other liens on the real property, regardless of the time of creation.

(b) For purposes of subdivision (a), the tax collector, for and on behalf of the state, shall execute and record with the county recorder of the county in which the property is located a release of equity or quitclaim of the property, in the form prescribed by the Controller. The release shall be acknowledged by the county clerk, without charge. Parties of interest in the property, prior to the issuance of the tax deed to the state shall acquire by the cancellation of the tax deed the same right or interests they had prior to the issuance of the tax deed, as if the tax deed were never issued. That right or interest shall be subject to the lien for taxes.

SEC. 75 thereof provided that notwithstanding Section 6 of Article XIII B of the California Constitution and Section 2231 or 2234 of the Revenue and Taxation Code, no appropriation is made for reimbursement.

SEC. 76 thereof provided that the act does not contain a repealer.

Limitation of action.—An action to recover taxes or to enforce the lien thereof is subject to the limitations prescribed by the Code of Civil Procedure. City of San Diego v. Higgins, 115 Cal. 170. This case strongly indicated but did not squarely hold that such an action is subject to the three-year period prescribed by Section 338 of the Code of Civil Procedure, as an action upon a liability created by statute, rather than to the five-year period prescribed by Section 336, as an action upon a judgment.

It was held in Clark v. City of San Diego, 144 Cal. 361, that a tax lien is extinguished when an action for the collection of taxes is barred, so that the owner may quiet title even though the taxes have not been paid. The court cited Civil Code Section 2911, to the effect that "A lien is extinguished by the lapse of time within which * * * an action can be brought upon the principal obligation." A contrary result was reached, however, in State v. Royal Consolidated Mining Co., 187 Cal. 343. In Lewis v. Rothchild, 92 Cal. 625, it was likewise held that the lien can be removed only by payment of the taxes or sale of the property for the payment thereof. The authority of the Clark case is further weakened by declarations in City of San Diego v. Higgins, supra, and in San Francisco v. Jones, 20 F. 188, and Woods v. Hyde, 64 Cal.App. 433, 437, that tax liens are not extinguished by reason of the fact that actions to collect the taxes or enforce the liens are barred.

In 1931 there was added to former Political Code Section 3816 the provision, now contained in Section 2195, that the lien ceases to exist after 30 years. No case has yet arisen applying this provision to the problem here discussed. See, however, the discussion of the 1931 amendment in Ducey v. Dambacher, 27 Cal.App.2d 658, 661.

The lien of an assessment continues until payment, despite the provisions of Section 2911 of the Civil Code relating to the extinguishment of liens by lapse of time. A property owner cannot, therefore, quiet title against the holder of an unpaid street assessment bond. Furthermore, the holder of the street assessment bond was held to be entitled to the surplus proceeds from the sale of property upon foreclosure of a superior lien. Raisch v. Meyers, 27 Cal.2d 773.

Lien not extinguished by payment under protest.—The lien is not removed by payment under protest of a tax which is subsequently adjudged void. National Holding Co. v. Title Insurance and Trust Co., 45 Cal.App.2d 215.