All Forum Posts by: Eli Kallison

I am doing some title research on property in California that is being auctioned by the county due to non-payment of taxes. This California State Legislative code outlines which encumberances will survive a tax auction (see below in italics), and I want to make sure that a Deed of Trust with Assignment of Rents does not fit into any of these categories. It does not seem to, but a couple properties have significant amounts owed to an individual through an Assignment of Rents document and I just want to get another set of eyes on this to make sure I'm interpreting this correctly.

The deed conveys title to the purchaser free of all encumbrances of any kind existing before the sale, except:

(a) Any lien for installments of taxes and special assessments, that installments will become payable upon the secured roll after the time of the sale.

(b) The lien for taxes or assessments or other rights of any taxing agency that does not consent to the sale under this chapter.

(c) Liens for special assessments levied upon the property conveyed that were, at the time of the sale under this chapter, not included in the amount necessary to redeem the tax-defaulted property, and, where a taxing agency that collects its own taxes has consented to the sale under this chapter, not included in the amount required to redeem from sale to the taxing agency.

(d) Easements of any kind, including prescriptive, constituting servitudes upon or burdens to the property; water rights, the record title to which is held separately from the title to the property; and restrictions of record.

(e) Unaccepted, recorded, irrevocable offers of dedication of the property to the public or a public entity for a public purpose, and recorded options of any taxing agency to purchase the property or any interest therein for a public purpose.

(f) Unpaid assessments under the Improvement Bond Act of 1915 (Division 10 (commencing with Section 8500) of the Streets and Highways Code) that are not satisfied as a result of the sale proceeds being applied pursuant to Chapter 1.3 (commencing with Section 4671) of Part 8, or that are being collected through a foreclosure action pursuant to Part 14 (commencing with Section 8830) of Division 10 of the Streets and Highways Code. A sale pursuant to this chapter shall not nullify, eliminate, or reduce the amount of a foreclosure judgment pursuant to Part 14 (commencing with Section 8830) of Division 10 of the Streets and Highways Code.

(g) Any federal Internal Revenue Service liens that, pursuant to provisions of federal law, are not discharged by the sale, even though the tax collector has provided proper notice to the Internal Revenue Service before that date.

(h) Unpaid special taxes under the Mello-Roos Community Facilities Act of 1982 (Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code) that are not satisfied as a result of the sale proceeds being applied pursuant to Chapter 1.3 (commencing with Section 4671) of Part 8, or that are being collected through a foreclosure action pursuant to Section 53356.1 of the Government Code. A sale pursuant to this chapter shall not nullify, eliminate, or reduce the amount of a foreclosure judgment pursuant to Section 53356.1 of the Government Code.

Do you have a source for this? This seems to be directly referring to liens placed on a home from delinquent payment of income tax (payment plan for CA income tax, for example).

"Any lien for installments of taxes..."

i need to make sure because the owners of a property have a CA income tax lien filed against them for twice the ARV of the property.

Hi BP,

I am wondering if a lien filed against the owner of a property (not the property's property tax) going up for auction at a tax deed sale survives the auction? For example, there is a property I am doing title research on where the CA State Tax Board filed a lien against the property owner. 

I think that it would survive, because of the following 2 examples of title encumberances that survive a CA tax sale, but I am not quite sure:

a. Any lien for installments of taxes and special assessments, which installments will become payable upon the secured roll after the time of the sale.1

b. The lien for taxes or assessments or other rights of any taxing agency, which does not consent, to the sale under this chapter.

Can anyone with experience shed some light on this? Thank you!

-Eli

It's my understanding that state tax liens (not just the county tax liens from the foreclosing county), child support, and mechanics liens survive the CA tax auctions as well. 

Hi BP,

I am just realizing the importance of keeping business and personal accounts separate. My plan right now is to open a checking account and a credit card just for real estate expenses. I currently own 1 multi-unit rental property and some K1 syndicated investments, all of which are owned in my personal name.

I just purchased my rental property with funds from my personal checking account, and I have paid for about half of the rehab with funds from my personal checking account. 

My questions are:

1. Because I have no reserves in my "business" checking account, I can't pay for rehabs using this account. Are there issues with funding my business account with my personal account here? How should this be handled?
2. Should expenses related to investments for my syndicated and rental properties (like home office expenses, etc) be paid for through the business checking account?
3. How do you treat distributions from the business account to your personal account in terms of bookkeeping? 
4. Do you pay down payments from the business account for future property acquisitions?
5. Any other tips?

Thank you!

 Thanks Will. Is there a specific type of designer that you use, or is an "interior designer" who I would be looking for?

This is a great take, thank you Jack. Is there a good "central source" for this type of wisdom for rental properties?  

Hi BP,

I am closing on a 3 family soon and will be renovating one of the vacant units immediately. After renovation, I will move in to this unit and househack. It's a 1 bedroom unit, and needs the kitchen completely redone and a bathroom facelift along with new floors, paint and fixtures.

While I will be living in this unit for now, I eventually want to rent it out down the road and want to rehab this like it's a mid-level rental. My question is: how do you handle design and material selection for your rehabs? I have no idea how to best lay out the new kitchen (current layout is not ideal) and would love input about best materials / colors, etc to use.

Would it be worthwhile to hire an architect? This seems a little extreme for what I need - but I would like to consult with someone. Any recommendations on who to talk to about this?

Thanks everyone for the suggestions!

I found that Traveler's Insurance will do a replacement cost policy, but they are able to modify it down to what you want your coverage to be. For example, they calculated the full replacement cost of my 3 family in Shaw as $625,000, but I have coverage for $350,000 (slightly above value). 

I found this to be a cheaper option than ACV with Shelter. Has anyone else used Traveler's?