Assembly Member Wilson proposes changes to California tax-defaulted property sales

California Assembly Bill 418, introduced by Assembly Member Wilson on February 5, 2025, seeks to amend existing property taxation laws concerning tax-defaulted properties. The bill aims to enhance transparency and accountability in the sale of such properties by requiring county boards of supervisors to conduct public hearings before approving any sales.

Currently, California law allows taxing agencies to sell tax-defaulted properties after they have been in default for five years. Under existing regulations, various entities, including counties and nonprofit organizations, can purchase these properties, often for low-income housing or public use. However, AB 418 introduces a significant procedural change: it mandates that a board of supervisors must hold a hearing and provide notice to interested parties before any sale can be approved. This hearing must determine whether the proposed sale price meets or exceeds the tax sale value of the property or if the tax sale value is insufficient to redeem the property.

The bill stipulates that notice of the hearing must be mailed at least 30 days in advance to the last assessee and other parties of interest, detailing the property description, proposed sale price, and hearing specifics. Additionally, any costs incurred from conducting the hearing will be the responsibility of the taxing agency or nonprofit organization involved in the sale.

This legislative move is significant as it aims to protect the interests of property owners and the community by ensuring that sales of tax-defaulted properties are conducted fairly and transparently. The requirement for public hearings could lead to increased community engagement and oversight, potentially preventing the sale of properties at undervalued prices.

However, the bill has sparked debates regarding its implications for local governments and nonprofit organizations. Critics argue that the added procedural requirements may slow down the sale process and increase administrative burdens, particularly for cash-strapped counties. Proponents, on the other hand, emphasize the importance of safeguarding community interests and ensuring that properties are sold at fair market values.

The bill also includes provisions for state reimbursement to local agencies if the Commission on State Mandates determines that the bill imposes costs on them, ensuring that local governments are not financially burdened by the new requirements.

As AB 418 progresses through the legislative process, its potential impact on property taxation and local governance will be closely monitored. The outcome could set a precedent for how tax-defaulted properties are managed in California, balancing the need for revenue with the rights of property owners and community stakeholders.