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AB 2705

Property taxation: tax-defaulted property sales: excess proceeds claims.

2025-2026 Regular Session Introduced by Diane Dixon and 1 co-sponsor

AB 2705 requires written, disclosed agreements for handling excess tax‑sale proceeds, limits fees to 10%, protects parties’ rights to file directly, and adds post‑2027 safeguards.

In committee: Set, first hearing. Hearing canceled at the request of author.
#propertytaxation #excessproceedsclaims #tax-defaultedpropertysales
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WeVote Research Nonpartisan
Bill Summary · AB 2705

Summary of AB 2705 (California, 2025-2026)

Main purpose and intent

AB 2705 aims to regulate and reform how excess proceeds from tax-defaulted property sales are claimed and managed in California. The bill shifts certain requirements regarding who can act on behalf of a party of interest and how such arrangements are structured, with the stated goal of increasing clarity and consumer protections for parties entitled to excess proceeds.

Key provisions and changes

  • Existing framework retained and expanded. The bill amends Section 4675 and adds Section 4675.2 to the Revenue and Taxation Code.

  • Delegation to handle excess proceeds (new framework).

    • Allows any party of interest to enter into an agreement with another person or entity to act on their behalf for filing an excess proceeds claim (replacing the prior requirement that a claimant prove certain disclosures when acting through a representative). The agreement must comply with the new provisions of Section 4675.2.
    • The agreement must be in writing and subject to specified controls designed to protect the party of interest (see below).

  • Conditions for validity of an agreement (Section 4675.2).

    • The agreement must include a detailed disclosure, including:
    • Assessor’s parcel number and situs (if available) of the property.
    • That excess proceeds are currently in the county’s delinquent tax sale trust fund.
    • The contact information for filing the claim.
    • The agreement must be signed by the party of interest after receiving the disclosure.
    • It must clearly advise the party of their right to file a claim directly with the county at no cost.
    • It may not require pre-approval of the claim or payment of fees before claim approval and distribution of proceeds.
    • The fee or compensation to be paid by the party of interest cannot exceed 10% of the amount of excess proceeds awarded.
    • The required disclosures must be made conspicuously, in writing, and in 12-point type, with translations as needed if the transaction is in a language other than English.

  • Disclosures by the representative (Section 4675.2).

    • Any person/entity acting on behalf of a party of interest must clearly disclose the above information to the party of interest, including the amount of excess proceeds and how to file the claim, and ensure the party is aware of their right to file directly at no cost.

  • Other procedural details preserved.

    • Timeframes for filing claims remain: claims must be postmarked or received before one year after recordation of the tax collector’s deed.
    • Priority of distribution remains based on specified priorities (lienholders prior to recordation, then record title holders), with distributions beginning no earlier than one year after deed recordation, subject to court actions or rescission proceedings as applicable.
    • Provisions regarding assignments of rights to excess proceeds and related disclosures are retained, with added conditions applicable to assignments after January 1, 2027.

Who and what would be affected

  • Parties of interest in tax-defaulted properties (e.g., lienholders, owners with recorded title, others with a stake in proceeds) who are entitled to excess proceeds.
  • Representatives/agents (attorneys, brokers, or other entities) who assist with filing excess proceeds claims on behalf of parties of interest.
  • County tax collectors and their procedures for processing claims, administering the delinquent tax sale trust fund, and distributing excess proceeds.

Significant timeline and procedural aspects

  • Effective date for new provisions: January 1, 2027.
  • All new written agreements and disclosures under the 4675.2 framework would apply to agreements entered into on or after that date.
  • Existing processes for filing claims and distribution timelines remain, with the new protections and requirements in place for post-2027 agreements.

Overall, AB 2705 introduces tighter, written safeguards for agreements that assist with excess proceeds, ensuring clarity, informed consent, and fair fee limits for parties of interest.

Compiled from official sources — confirm details with the bill’s official record.

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