Legal Question in Real Estate Law in California

Re: Property Tax Appeal possible?

Sure, you can appeal, but why should you win? The reassessment was (it seems) fully in line with the law, which says that property is reassessed when it changes hands, except in very limited circumstances defined in the law.

Whether money changed hands or not is not dispositive. The reassessment is based upon market value, and selling price is only evidence of value, not final proof.

What do you mean, "If I decided to sell the house while I was out of the country?" You can't sell it. You don't own it. Your sister does.

The line of credit your sister got is probably secured by a lien against your sister's house. If she transferred it back to you, i.e. if you recorded the quitclaim deed she gave you, three things would happen, none of which you would like: 1) the house would be reappraised again, probably at a higher value. 2) you would have a house encumbered by a loan that had priority over your (newly reacquired) title; and 3) the sale from your sister to you would probably trigger a "due on sale" clause in the loan, and unless YOU (or someone) immediately paid the loan, the lender could commence foreclosure proceedings.

This whole set of transactions reeks of fraud and attempts to evade or mislead lenders and other creditors. I wish you luck, but I see very rough waters ahead for you, and your sister as well, who may be equally liable to creditors, both lenders on the house and any others you might have had pursuing you. Gifts of property to relatives are always suspect, and your property transfers are going to be scrutinized by your creditors.

Finally, you or your sister may have serious income tax problems that will overshadow the property tax increase. There are capital gains and gift tax issues here that you didn't even mention. The IRS and the FTB are likely to pick up on these transactions, since they are of public record.

My advice is to get local legal advice at once. I think you have created a huge mess for yourself by trying to outfox someone without really understanding what you were doing.

If a lawyer advised you to do these property deals with your sister, get a malpractice attorney right away!