What happens when you pay someone else’s property taxes? 

Under California law, paying someone’s property taxes does not automatically grant ownership of the property. In California, paying someone else’s taxes, even if done in good faith, is considered a gesture of goodwill or a means of avoiding a tax lien, but no matter the motive, payment does not transfer legal ownership. 

If, however, individuals pay someone else’s property taxes for a long period, they may have an ownership claim through adverse possession. Understanding the consequences of paying someone’s else property taxes helps individuals develop a better understanding of property ownership and all its obligations.  

Property Taxes

Generally, property taxes are synonymous with property ownership. Property taxes are ordinarily assessed on all property within a certain territory proportionally to its value. Under California law, this means property taxes are imposed on the property itself, not the individual property owner. Accordingly, no personal liability arises from the nonpayment of property taxes; instead, the unpaid taxes become a lien against the property. (Garcia v. County of Santa Clara, (1978) 87 Cal.App.3d 319.) This lien attaches directly to the property and remains until the delinquent taxes are paid. (National Holding Co. v. Title Ins. & Trust Co., (1941) 45 Cal.App.2d 215.) 

Property owners do, however, have an equitable and moral obligation to pay property taxes. (Glunt v. City and County of San Francisco, (1969) 274 Cal.App.2d 269.) As a public policy matter, courts impose delinquent penalties on owners defaulting on their tax obligations to encourage voluntary and timely payment. (Weston Inv. Co. v. State, (1948) 31 Cal.2d 390.) These penalties accumulate over time, steadily increasing the amount owed. (Ibid.) If the delinquency persists, owners may forfeit their property interest in a sale of the property to the state as the preliminary step of enforcing a tax lien. (Ibid.; see also Chesney v. Gresham, (1976) 64 Cal.App.3d 120.) This sale is the start of a five-year period during which the property owner can reclaim their property by paying the outstanding taxes, costs, and incurred penalties. (Weston Inv. Co. v. State, 31 Cal.2d, 391-92.) 

Paying Someone’s Property Taxes

Paying someone else’s property taxes does not automatically grant you ownership of the property. In fact, California law provides no meaning to this act comparable to gaining ownership interest, whether payment is made by mistake or good-will. Instead, the payment is considered to fulfill the property tax obligation, potentially curing existing tax liens on the property, without conferring any ownership interest to the payor. 

Mistaken Payment

If taxpayers accidentally pay property taxes on the wrong parcel of land, they can petition the tax collector for relief. (Sierra Inv. Corp. v. Sacramento County, (1967) 252 Cal.App.2d 339.) Upon receiving the petition, the tax collector can cancel the payment on the unintended property and transfer the payment to the correct property, if this action meets certain criteria, like notifying the mistaken property’s owner and allowing them a chance to contest the payment’s recission at a hearing. (Ibid.) Mistaken payments do not confer the land’s ownership interest. 

Payment by Strangers

Strangers who pay someone else’s property taxes are not entitled to any property ownership interest. In fact, payment by a stranger, who is not under a moral or legal obligation to pay the taxes, is considered a typical mode of paying taxes despite the payer being unable to acquire to any right or title to the property through payment. (Garvey v. Byram, (1941) 18 Cal.2d 279.) 

Adverse Possession

In some instances, paying someone else’s taxes for a long period of time, may allow the payor to bring an ownership claim under adverse possession. As such, paying someone else’s property taxes does not automatically lead to ownership of the property, but is a necessary element for establishing adverse possession. (Code Civ. Proc., § 325.) Accordingly, the party claiming adverse possession must show they have timely paid all state, county, or municipal taxes on the land for the statutory five-year period and must be able to prove these payments using the county tax collector’s certified records. (Code Civ. Proc., § 325.) 

In California, parties claiming to adversely possess property must meet several requirements, in addition to proving they’ve paid all taxes levied and assessed on the property. Specifically, claimants must also show: 

• Actual Occupation of the property under circumstances that provide the owner with reasonable notice. 
• Possession of the property that is hostile to the owner’s title. 
• A claim that the property is theirs under color of title or claim of right; and, 
• That they have possessed the property continuously and uninterrupted for at least five years. (Nielson v. Gibson, (2009) 178 Cal.App.4th 318; Estate of Williams, (1977) 73 Cal.App.3d 141.) 

Failing to pay property taxes is fatal to adverse possession claims. Thus, the claimant carries the burden of proving that either no taxes were assessed against the land during the statutory period or that they paid all the assessed taxes. (Nellie Gail Ranch Owners Assn. v. McMullin, (2016) 4 Cal.App.5th 982.) Claimants who cannot show either will fail to show they’ve adversely possessed the property and gain no ownership interest. 

What happens when Co-Owners Pay Each Other’s Property Taxes?

In the context of co-ownership, co-owners are obligated to pay their proportionate share of the property’s common costs such as taxes, mortgage payments, insurance payments, improvements and expenses. Because co-owners are required to pay their proportionate share of property taxes on the co-owned property, a co-owner who pays the property taxes in full, discharges a lien on the common estate and inures a benefit on all co-owners. Therefore, the co-owner who paid the entire sum is entitled to a refund from the other co-tenants equal to their proportionate shares. (Conley v. Sharpe, (1943) 58 Cal.App.2d 145, 156.) 

Like California’s general rule on paying someone else’s property taxes, co-owners are not afforded any additional ownership rights by paying the entire sum of property taxes. This is because California courts have established that co-owners have no obligation to protect the property interests of other co-owners. Accordingly, the law affords co-owners no legal mechanism to enforce the payment of property taxes without a written agreement establishing that obligation. (Bardis v. Oates, (2004) 119 Cal.App.4th 1.) 

Because the law does not hold non-paying co-owners liable for refusing to pay property taxes, the best remedy available is to have the property sold in a partition action. Partition Actions are the legal procedure for selling co-owned property in which the court divides the co-owned property and its sale proceeds among co-owners according to their ownership interests. In California, co-owners who make advances from their own pocket to preserve the common estate increase their investment in the property by the entire amount of their advancement.  (Southern Adjustment Bureau, Inc. v. Nelson, (1964) 230 Cal. App. 2d 539, 541.) As such, co-owners are entitled to reimbursement of their entire advancement before the balance of the property’s sale proceeds are equally divided. (Ibid.) 

Further, Wallace v. Daley, established that according to the principles of equity, every partition action includes a final accounting of each co-owners’ charges and credits including their proportional shares for necessary repairs, mortgage payments, and taxes. ((1990) 220 Cal.App.3d 1028, 1035.) So, while co-owners do not obtain additional ownership interest for paying more than their proportional share of property taxes, they are entitled to recover any payments made for common costs exceeding their proportionate share, including property taxes in a partition action. (Ibid.; Code Civ. Proc., § 872.140.) 

What is an Example?

“Shawn” and “Julie” are co-owners of a land parcel in a rural area. For five years, Shawn and Julie both paid their proportionate share of property taxes, however, in the sixth year of their co-ownership, Shawn refuses to pay. To avoid a lien being imposed on their property, Julie pays the entire sum of property taxes assessed against their property. Once the payment has been made, Julie takes the receipt to Shawn and kindly asks him to reimburse her for his half as he always has. Shawn again refuses and tells Julie the property taxes are her sole responsibility from now on. After several failed attempts to recover Shawn’s proportionate share, Julie decides to partition the property. 

Because Julie paid more than her proportionate share of property taxes, she is entitled to a reimbursement of Shawn’s share of all property taxes Julie paid after Shawn’s refusal. During the partition’s accounting stage, Julie will be credited for these payments before sale proceeds are distributed between the two. 

Conclusion

The Underwood Law Firm has a team of experienced lawyers who can help guide you through complicated legal matters like partition and help you pursue solutions to ensure you recover the entirety of what you are legally entitled to.