California: Proposed Legislation to Require Tax Disclosure

By: Corrie M. Anders: REALTOR® Magazine Online
The California legislature is considering a proposal that would head off the financial jolt many first-time homebuyers get when they receive an unexpected property tax bill.

The legislation (AB 459) would require sellers, or their real estate professionals, to notify prospective buyers about the existence of supplemental property tax bills. Buyers would receive a one-page disclosure that clearly spells out their potential tax liability.

The additional tax represents the amount due on the difference between the seller’s old property value and the buyer’s new home value. The tax “sometimes creates confusion for the buyer,” according to the state’s legislative analyst, because county assessors may not mail the tax bill until three weeks to six months after the close of escrow.

Assembly member Jenny Oropeza (D-Carson), who introduced the legislation, says, “first-time homebuyers too often suffer sticker shock when they are handed a supplemental property tax bill that often may add thousands of dollars to the price of their home. This can cause substantial financial stress to families struggling to make the biggest purchase of their lives.”

The legislative analyst says many sellers and real estate professionals voluntarily disclose to buyers that they may have to pay supplemental property taxes.

The CALIFORNIA ASSOCIATION OF REALTORS® opposes the measure, which the trade group says is “unnecessarily duplicative.”