The Blackacre memorandum: pitfalls to avoid.

Title people enjoy telling each other stories about what happened in a dispute over a particular parcel of land, either as reported in a recent case, or in a current dispute. When telling the story, they often identify the property in question as "Blackacre".

Twenty-first century title disputes involve the government as a party much more often than in the past. But some things never change. Notice how old some of the cases referenced below are--one is over a hundred years old!

This time every year, local title insurance companies receive calls from potential investors regarding property foreclosed by the Los Angeles County Treasurer-Tax Collector for delinquent real property taxes. When the government exercises its power in forfeiture of private property interests such as they do in a tax foreclosure, courts apply a high level of scrutiny when reviewing the regularity of the proceedings. Following are some of the more serious known pitfalls we warn the callers about. Such problems can void the foreclosure and render the tax deed purchaser's title to Blackacre doubtful: Tax levied on duly exempt property; double assessment (one of which goes delinquent. See Nutting v. Herman Timber Co. 214 Cal 2d 650; 29 Cal Rptr 754 (1963)); County "A" levying a tax on property in County "B"; tax levied by an unqualified agency; failure to give notice to the taxpayer or his personal representative (Sinclair Valentine Co. v. County of Los Angeles, 201 Cal App 3d 1021; 247 Cal Rptr 568 (1988) relying on Mennonite Board of Missions v. Adams, 462 U.S. 791; 103 S. Ct. 2703; 77 LEd 2d 180 (1983)); erroneously reciting the name of the individual assessed as "E. W. Davies" instead of "E. W. Davis" (Henderson v. De Turk, 164 Cal. 296; 128 P. 747 (1912)); failure to give notice to encumbrance holders (Bank of America v. Giant Inland Empire R.V. Center, 78 Cal App 4th 1267; 93 Cal Rptr 626 (2000)); and failure to post the property or properly publish.

The Soldiers' and Sailors' Civil Relief Act of 1940; replaced by the Servicemembers Civil Relief Act (10 USC 1408(b) (1)(D)), prohibits the sale of a servicemember's interest by sale for delinquent property taxes without a court order. The service-member is, in addition, afforded an extended period in which to redeem: up to 180 days after termination of or release from military service. Some form of this law has been in effect since World War I.

The statutes purport to cure any irregularity in the proceedings. 3725 Rev. & T.C. Title insurance companies cannot rely on that one-year statute because of the likelihood of Due Process violations--some mentioned above--which are irregularities that cannot be cured by any statute. Ramish v. Hartwell 126 Cal 443; 58 P 920 (1899). In the Bank of America case referred to above, a tax deed was rendered void for lack of proper notice to the lender. One court held in another case that, based on the circumstances, Due Process required posting Blackacre even though the statute did not require it. Banas v. Transamerica, 133 Cal App3d 845 (1982).

There are other problems with tax titles, too numerous to mention. Due to the occurrence of such drastic problems, title insurance companies typically avoid applications on property foreclosed by the County for delinquent real property taxes unless a proper Quiet Title action is brought by an experienced lawyer under 3727, 3950, 3951, Rev. & Taxation Code.

Please note: The author of this article does not intend to offer legal advice. Case references are for the reader's convenience. Contact a lawyer with any questions.

Lawrence Lacombe is a land title consultant. He is also Vice President and Chief Title Officer in Fidelity National Title Company's main Los Angeles Office.