Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2014
 

Revenue and Taxation Code

Property Taxation

Part 2. Assessment

Chapter 3. Assessment Generally

Article 4. Property Escaping Assessment

Section 531.2

531.2. Escaped real property. (a) When the property is real property which subsequent to July 1 of the year of escape for purposes of this article, or subsequent to July 1 of the year in which the property should have been lawfully assessed, for purposes of Article 3 (commencing with Section 501), but prior to the date of that assessment and the showing thereof on the secured roll, with the date of entry specified thereon, has (1) been transferred or conveyed to a bona fide purchaser for value, or (2) become subject to a lien of a bona fide encumbrance for value, the escape assessment pursuant to either of these articles shall not create or impose a lien or charge on that real property, but shall be entered on the unsecured roll in the name of the person who would have been the assessee in the year in which it escaped assessment and shall thereafter be treated and collected like other taxes on that roll. The tax rate applicable shall be the secured tax rate of the year in which the property escaped assessment.

(b) If the real property escaped assessment as a result of an unrecorded change in ownership or change in control for which a change in ownership statement required by Section 480, 480.1, or 480.2, or a preliminary change in ownership report, pursuant to Section 480.3, is not filed, the assessor shall appraise the property as of the date of transfer and enroll the difference in taxable value for each of the subsequent years on the secured roll, with the date of entry specified thereon. However, if prior to the date of the assessment the property has (1) been transferred or conveyed to a bona fide purchaser for value, or (2) become subject to a lien of a bona fide encumbrance for value, the escape assessment pursuant to this paragraph shall not create or impose a lien or charge on that real property, but shall be entered on the unsecured roll in the name of the person who would have been the assessee in the year in which it escaped assessment and shall thereafter be treated and collected like other taxes on that roll. The tax rate applicable shall be the secured rate of the year in which the property escaped assessment. "Assessment year" means the period defined in Section 118.

In the event of a failure to file a change in ownership statement required by Section 480, 480.1, or 480.2, or a preliminary change in ownership report, pursuant to Section 480.3, the interest provided in Section 506 may, by the order of the board of supervisors, be added.

(c) (1) Taxes resulting from escape assessments shall be prorated pursuant to paragraphs (2) to (5), inclusive, only if the board of supervisors of a county has adopted a resolution specifying that taxes shall be prorated pursuant to this subdivision.

(2) When real property has been transferred or conveyed to a bona fide purchaser for value subsequent to July 1 of the year of escape for purposes of this article, or subsequent to July 1 of the year in which the property should have been lawfully assessed, for purposes of Article 3 (commencing with Section 501), taxes resulting from escape assessments pursuant to this section shall be prorated between the following:

(A) The person who would have been the assessee if the change in ownership had not occurred.

(B) The person who purchased the property.

(3) If the real property has been transferred or conveyed to a bona fide purchaser for value more than once during the year of escape or assessment, each owner of record during that period shall be liable for a pro rata share of taxes based on the length of time during that period each bona fide purchaser was the record owner of that real property.

(4) When the assessor has identified the fact and amount of the escape assessment, the assessor shall identify the owners of record during the year of escape or assessment and the dates of ownership for each owner.

(5) The auditor shall compute the respective prorated shares of taxes for each owner of record. The share of taxes of the current owner of the real property shall be placed on the secured roll as a lien on the parcel for which the escaped assessment was discovered. The share of taxes of any previous owner during the year of escape or assessment shall be entered on the unsecured roll.

History.—Added by Stats. 1968, p. 2146, in effect November 13, 1968. This provision was formerly a part of Section 531, Stats. 1973, Ch. 1190, p. 2503, in effect January 1, 1974, substituted the present language for prior provision which was confined to a statement of when escapes for real property would lie. Stats. 1976, Ch. 156, p. 251, in effect January 1, 1977, substituted the balance of the first sentence after "such real property" and the second sentence for "but shall be collected as follows" and for former subsections (a) and (b). Stats. 1980, Ch. 1081, in effect September 26, 1980, added the second paragraph. Stats. 1981, Ch. 1141, in effect January 1, 1982, added "or change in control" after "change in ownership" and added ", 480.1, or 480.2" after "480" in the first sentence, and added "or change in control" after "changes in ownership" in the third sentence of the second paragraph. Stats. 1987, Ch. 537, in effect January 1, 1988, deleted "of this chapter" after "Section 501)", in the first sentence of the first paragraph; substituted "that" or "these" for "such" or "said" throughout text; and substituted "changes" for "change" after "ownership or" in the third sentence, and added the fourth sentence of the second paragraph. Stats. 1990, Ch. 126, in effect June 11, 1990, substituted "that" for "such" after "date of" in the first sentence of the first paragraph substituted ". However," for ", provided, however, that" after "thereon", substituted "the" for "such" after "date of", substituted "that" for "such" after "charge on", and added a comma between "property" and "but" in the former first sentence of the second paragraph, and added the third paragraph. Stats. 1990, Ch. 723, in effect January 1, 1991, added subdivision letters (a) and (b), and added subdivision (c). Stats. 1994, Ch. 544, in effect January 1, 1995, deleted former fourth sentence of subdivision (b) which read, "Notwithstanding the provisions of Section 532, escaped assessments resulting from these unrecorded changes in ownership or changes in control shall be made within eight years after July 1 of the assessment year in which the real property escaped taxation or was underassessed." Stats. 1999, Ch. 941 (SB 1231), in effect January 1, 2000, added ", or a preliminary change in ownership report, pursuant to Section 480.3," after "480.1, or 480.2" in the first sentence of the first paragraph and added "or a preliminary change in ownership report, pursuant to Section 480.3," after "480.1, or 480.2," in the first sentence of the second paragraph of subdivision (b).

Note.—Section 1(b) of Stats. 1987, Ch. 537, provided that the Legislature further finds and declares that the provisions of law relating to escape assessments are in no way inconsistent with Article XIII A of the California Constitution. An escape assessment merely reflects the amount by which the property has been underassessed and is a mechanism which permits the correction of the effects of that underassessment. The amount of the underassessment must be determined, however, in accordance with the applicable statutory valuation standards. Thus, an escape assessment is merely a mechanism for implementing existing property tax law and cannot be in conflict with it. Accordingly, the amendments to Sections 531.2 and 532 of the Revenue and Taxation Code made by this act are necessary to make clear that an escape assessment resulting from the correction of an error in a base-year value may be made within four, six, or eight years, as applicable, after the first day of July of the assessment year, as defined in Section 118 of the Revenue and Taxation Code, in which the property either wholly escaped taxation or was underassessed, as determined by applying the applicable Article XIII A valuation standards.