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Understanding the lien date

August 4, 2002

Every taxing entity wants to make clear who has the responsibility for paying property taxes on real and personal property. The owner of property on a certain date and time has that responsibility. California Revenue and Taxation Code Section 117 says the "lien date is the time when taxes for any fiscal year become a lien on property."

The word lien relates back to the Latin verb ligare meaning "to tie or bind" and entered the English language from the medieval French noun meaning a "band or tie." Thus, placing a lien against someone or their property is a way of "binding" that property to show an obligation owed by that owner to the person who holds the lien. In this case, the obligation is to pay the taxes and the "person" who holds the lien is the taxing entity. Jan. 1 at 12:01 a.m. is the current lien date in California.

Current property taxes on real property such as land, homes, commercial/industrial structures and ranches/vineyards are usually prorated in escrow as of the date of the transfer. The lien date does not make a significant impact on these transactions. However, property taxes on boats, aircraft, unsecured business property and possessory interests are usually not prorated when there is a transfer. Thus, someone who sells a boat that they owned on Jan. 1, in February is still responsible for the property taxes for the fiscal year beginning July 1 after that February and running through June 30 of the next calendar year.

Persons who sell their boat or aircraft between Jan. 1 and when the bill comes out should collect the expected amount of taxes from the buyer. The reverse happens if someone buys a boat or aircraft after Jan. 1. They will not receive a regular bill until the July following the next January after their purchase.

Businesses often change hands through a process known as a bulk sale. If this transaction happens between Jan. 1 and when the unsecured property tax bill for that business comes out, the seller will be responsible for the taxes for the next fiscal year unless provisions are made in the bulk sale escrow to prorate the taxes. Proration is not automatic in bulk sale transfers.

Finally, persons who rent hangars at the Napa County Airport, homes at Napa State Hospital or the California Veterans Home, use property at the Napa Fairgrounds or from other non-taxable agencies are subject to possessory interest taxes. These taxes are for their private use of non-taxable property. The person who holds the possessory interest on Jan. 1 is responsible for the coming fiscal year taxes even if they move out on Jan. 2. Again, there is no proration with the new lessee. Anyone thinking of relocating from any of these premises should time the lease to end, if possible, as late in the calendar year as possible.

Should you have any questions please contact Napa County Assessor John Tuteur at 707.253.4459 or by e-mail



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