Legal Question in Real Estate Law in California
Property Tax dispute
To LawGuru,
I have purchased a house in Northern California in 1992. At the time I didn�t have sufficient income and I wasn�t able to qualify to the loan by myself, so a friend had agreed to become a co-signer.
My friend had never loan me money and never invested in the property.
For the life of the loan I was the only one who has made the payments, paid property tax and obviously I took care off all the other house expenses.
2 years ago I have decided to refinance. In the process the lender has notified me that I can qualify by my self for the loan. So this is what I have done, and my friend was removed off title.
The County of Alameda has interpreted the action of removing my friend off title as a sale. They increased my property tax as if I bought the 50% of the property from my friend.
My question is � are they correct by doing so? If not, what I should do?
2 Answers from Attorneys
Re: Property Tax dispute
You don't say so, but I guess when your friend became a co-signer on the loan, he also became a co-owner on the deed.
If so, the process of transferring his interest to you is indeed a sale, and there is no exemption from re-appraisal of the sold portion for unrelated persons.
If your friend had merely been a guarantor and only some kind of security interest had been recorded, the outcome would be different.
A question arises as to what basis the county used for re-valuing the partial interest your friend conveted back to you. Was there a sale price they could rely upon, or was it a market value reappraisal?
While I think you have an uphill battle, it is not hopeless to get this situation reconsidered by the appraiser. You can be better advised by a local attorney (an Alameda County property tax specialist) who can look at your deal's documents and who knows county policy. Surprising as it may seem, there are differences from county to county in how reassessment rules are applied.
If you can show that your friend was in fact only a guarantor and never an equity co-owner, you might (or, perhaps, should) prevail.
Re: Property Tax dispute
It will partially depend on whether or not you were both on title from the beginning. There can be some exemptions where a joint owner remains as full owner.
I will need more detail in order to determine if there should be an exemption.
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