There’s a lot of confusion about paying property tax and getting home ownership in California. Most people think if someone else pays their property taxes, they’ll get the homeownership legally, which is not true.
You can become a homeowner by buying tax deeds, not by paying someone taxes. In California, the government sells defaulted property tax deeds through public auctions, and the highest bidder gets the chance to buy the property.
Below in this article, we’ll answer what happens if someone else pays my property taxes in Northern California and explain the entire process. We’ll also address the difference between the tax lien certificate that other states offer and the tax deeds.
Property Tax In California
Similar to other states, California requires property owners to pay taxes on their real estate. The regular property tax rate is 1% of the property’s assessed value. If someone fails to pay these taxes for an extended period, there are consequences.
The bigger and more valuable your property is, the more you’ve to pay the taxes. The taxes you pay go to the government and contribute to government service, municipal employer salaries, infrastructure and land construction, recreational services, and so forth.
What Happens If You Don’t Pay Property Taxes? Tax Lien Certificates Vs. Tax Deeds
In the USA, two things happen when someone doesn’t pay property taxes. First, the government can sell tax lien certificates, and the second option is tax deeds. Since the California govt doesn’t sell tax lien certificates, your property will end up with tax deed options.
In simple words, tax deeds are legal documents that transfer property ownership to govt. But it only happens if the property becomes tax defaulted. To help you out, we’ll explain both the tax lien certificate and tax deeds.
1. Tax Lien Certificate
A tax lien certificate doesn’t give the right to ownership right away. The property owner has the time to redeem the tax lien certificate by paying the investor back. The payment includes the value of the certificate, the additional fees, and interest.
Any owner who fails to pay back to the investor during the redemption period might lose the property. The investor can proceed further with the foreclosure process according to the law, evict the homeowner and get ownership, but this doesn’t happen in California.
2. California Tax Deeds
According to California law, if a property becomes tax defaulted, the county tax collector can sell the property. This entire process is done in a public auction, where the highest bidder purchases the tax deeds.
Unlike tax lien certificates, tax deeds involve auctioning. The person who bids the highest gets to purchase the home right away (excluding documentation time). Meanwhile, in the tax lien certificate, the investor only gets the property if an owner fails to pay it back.
If You Pay Someone’s Property Taxes, Do You Own The Property In California?
You can’t get ownership of property by just paying property taxes, but it’s possible by purchasing tax deeds in California. Once you buy the tax deeds, it takes about 60 to 70 days for the county to transfer the deed to your name, making the property officially yours.
Remember that the process includes a public auction. Almost anyone whose age is 18 or over can bid on the property; the person who bids the highest owns the property. So you must have a big budget to attend these tax deeds auctions.
How Long Can Property Taxes Go Unpaid In California?
The property taxes can go unpaid for up to 5 years for residential properties and 3 years for commercial properties. If someone fails to pay the taxes in the given time frame of 3 to 5 consecutive years, the government has the right to declare the property tax defaulted.
When a property becomes tax defaulted, the county tax collector takes action. The government sends official notice to the homeowner to pay the taxes and warns of a public auction to sell the tax deed if payment isn’t made.
The answer to what happens if anyone else pays my property taxes in Northern California is – nothing happens. Paying someone taxes doesn’t make a person the property owner, but you’ll become the owner if you purchase the tax deeds in the auction.
The person who offers the highest bid in the auction gets the tax deed ownership. After bidding the highest, you have to wait for about 60 to 70 days so that the county can do all the paperwork. For more info, you can contact our estate planning attorney.
Dustin MacFarlane’s primary focus is on Elder Law and protecting families and seniors. He is a Certified Specialist in Estate Planning, Trust, and Probate Law by the State Bar of California Board of Specialization — a rare distinction.
Prior to becoming an attorney, Mr. MacFarlane worked in the Long Term Care industry. After becoming licensed to practice law in January of 2009, Elder Law quickly became his focus. Seeing the need during his former career, Mr. MacFarlane pursued Elder Law as a primary area of practice.