Facts: An owner of a commercial property pays all operating costs and property taxes from the property’s rental income. The economic recession occurs and the owner is unable to pay property taxes through either their income or capital from their single asset due to loss of rental income. A buyer later purchases the property and assumes liability for all unpaid property taxes, along with penalties assessed by the tax collector for failure to make timely payments.
Claim: The buyer seeks to have the penalties waived by the tax collector, claiming the buyer meets the statutory conditions for cancellation of penalties since the previous owner’s failure to pay property taxes was caused by the economic recession and is thus considered reasonable cause and circumstances beyond the owner’s control.
Counter claim: The tax collector claims the buyer is ineligible for cancellation of the penalties since the statute does not apply to a failure to pay property taxes due to economic conditions or financial hardship.
Holding: A California court of appeals holds the buyer is not entitled to a cancellation of penalties for delinquent property taxes since the statute only applies to reasonable cause and uncontrollable circumstances that prevent actual delivery of timely payments and does not encompass the economic recession or the single-asset ownership structure that compromised the previous owner’s financial ability to pay. [Ashlan Park Center LLC v. Vicki Crow (February 2, 2015)_CA4th_]
