Court Opinion

ID: 9721528
Source: CourtListenerOpinion
Date Created: 2023-08-26 09:01:46.014071+00
Date Added: 2024-06-11T18:24:27.046869
License: Public Domain

KING, J.
I dissent because the sole remedies for a purchaser of real property at a tax sale are those provided in the Revenue and Taxation Code. The Legislature has never changed the historic rule that the doctrine of caveat emptor, let the buyer beware, applies to purchasers of real property at tax sales which take place at public auction.
Historically, the purchase of title to property at a tax sale was viewed as a speculative act; tax titles were often invalidated for minor procedural errors. Thus, purchasers at tax sales were subject to the rule of caveat emptor. (See Bell v. County of Los Angeles (1928) 90 Cal.App. 602, 605 [266 P. 291].) One rationale behind this rule was that all potential purchasers could inspect the tax records and learn the status of the land. (72 Am.Jur.2d, State and Local Taxation, § 1037, p. 307.) To provide some stability to tax titles, California passed legislation which corrected minor defects in tax titles and provided conclusive presumptions on the regularity *251of tax sales. (See 2 Bowman, Ogden’s Revised California Real Property Law (Cont.Ed.Bar 1975) §§ 21.26-21.30, pp. 1098-1103.) One such provision is Revenue and Taxation Code section 3711, which states “[e]xcept as against actual fraud, the deed duly acknowledged or proved is conclusive evidence of the regularity of all proceedings from the assessment of the assessor to the execution of the deed, both inclusive.” (Italics added.) If a person succeeds in voiding the tax title because the tax sale was invalid or irregular, the purchaser of the tax title is entitled to reimbursement from the county. (Rev. & Tax. Code, §§ 3725-3731.) However, these legislative changes have not otherwise changed or eliminated the applicability of the doctrine of caveat emptor to purchasers of tax titles at public auction.
California cases hold that purchasers at tax sales may only recover damages from the seller as authorized by statute. (Routh v. Quinn (1942) 20 Cal.2d 488, 490 [127 P.2d 1, 149 A.L.R. 215]; People v. Chambers (1951) 37 Cal.2d 552 [233 P.2d 557].) These cases deal with tax titles that are worthless or void due to procedural defects. In such cases, statutes provide reimbursement remedies for disappointed purchasers. There is no statutory or case authority which provides recovery because the purchaser’s undisclosed purpose in buying the property cannot be carried out.
In the instant case, appellant purchased a perfectly valid tax title. He neither alleged nor showed actual fraud in the tax sale, nor does he claim the tax sale was invalid or irregular, so he cannot recover under reimbursement provisions of the Revenue and Taxation Code. He claims he is entitled to rescind his purchase under general contract principles because he did not know the land was “unbuildable. ” Appellant raises an issue of first impression—whether a purchaser at a tax sale is entitled to rescind the sale due to his unilateral “mistake” where no misrepresentation or concealment can be charged to the state or county.
The policies behind the caveat emptor rule in tax sales justify its application here. Each bidder at a tax sale has his or her own undisclosed plans, foreseeable or unforeseeable, for use or development of the property. It is reasonable to require bidders to verify that these plans are legally permissible under local zoning and building regulations and physically feasible on the property. It is a minimal burden on bidders to require them to obtain information about the property from public agencies before they bid. If appellant had consulted the City of El Cerrito Building Department before he bid at the tax sale, he would have discovered, as he did by making such an inquiry one week later, that the property was unbuildable.
The majority, on the other hand, would require the state to anticipate potential undisclosed uses of bidders at tax sales and warrant the validity of *252such undisclosed uses or development. I believe this burden is unreasonable and unjustified. The state has no reason to know of physical or legal restrictions, especially those imposed by local government, which may prevent or affect the particular development or use of the property which the purchaser has in mind. For example, under the majority’s view, a buyer at a tax sale could apparently purchase property at a tax sale with the intention of building apartments upon it, only to learn after the sale that the property is zoned for single family residential use and no rezoning can be obtained. Should such a successful bidder at a tax sale be able to rescind the sale due to his unilateral mistake and his own failure to investigate? I think not.
In the instant case, the City of El Cerrito Building Department, long before the tax sale, had imposed a prohibition on development on this parcel. There is no evidence the state knew or should have known of this prohibition.1 The state obtains tax-sold property by operation of law. Unlike private owners, the state has no interest in restrictions on the potential use of property or its development; its sole interest is the recovery of back taxes. The burden should be on buyers at tax sales at public auction, in advance of the sale, to take all steps necessary to assure themselves that the use and development of the property which they have in mind will be permitted by local government. It is onerous, if not impossible, to require the state or county to physically examine real property prior to a tax sale and, further, to dispel any undisclosed mistaken beliefs of bidders. The burden should be left to the most interested parties, the bidders.
The majority misses the mark when it concludes that “[t]he instant plaintiff’s error related to a permanent defect in the lot which would not have been cured by later inspection.” While a physical inspection of the property would not have shown it was unbuildable, plaintiff could have discovered this information before the tax sale by reasonable investigation through the public regulatory agencies. There was nothing that precluded him from obtaining the same information prior to the tax sale which he obtained one week thereafter.
Nothing has changed California’s law on tax sales as pronounced by our Supreme Court over 40 years ago “that in tax sales the doctrine of caveat emptor applies in all its vigor.” (Routh v. Quinn, supra, 20 Cal.2d at pp. 488, 490.)
*253Because I believe the doctrine of caveat emptor properly places the risk of mistake on potential buyers at tax sales, I would reverse die judgment.

The majority notes that the county removed a demolition lien on the property prior to the tax sale. There was no evidence that this was an irregular procedure or that the county knew the reason for the demolition which resulted in the lien.