When real estate owners fail to pay taxes over an extended period of time, they risk losing that property to a government auction. That appeared to be what happened when a homeowner's association failed to pay the bill for the common areas on Presidio Terrace. Residents of the street were alarmed to discover that The city of San Francisco had auctioned off the street to a San Jose couple for the low, low price of $90,000. Rather than accept the sale as the result of not paying your taxes for 30 years, the association filed a lawsuit and asked the San Francisco Board of Examiners to intervene. A majority of the Board found their claims compelling.
Can you buy property from the city?
The 7-4 vote to rescind the sale calls into question the practice of buying property in government auctions. From the buyer's perspective, it must have come as a shock to find that the San Francisco Board of Examiners could overturn the results of an auction conducted by the city. This is particularly true because the first complaints regarding the sale came nearly two full years after the auction. Are there any circumstances under which a real estate buyer can feel confident in what they have purchased?
Notice the notice
The Presidio Terrace homeowner's association claims that it did not know it owed taxes. The bills were sent to an accountant no longer in the employ of the association. The residents of the street claim they had no notice of the tax bill or the auction. When it comes to real estate, litigation is often about who knew what and when they knew it. It is generally good advice to learn as much as possible about the how and why of a property sale before moving forward.
The purchaser in this case has indicated that this fight is not over. The final disposition of Presidio Terrace may not be known for some time. Whatever the outcome, it serves as a reminder that real estate is a complex industry. When conflicts arise, it is important to get experienced advice as soon as possible.