AB 2705 California Assembly · 2025-2026 Regular Session

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

Summary

Under existing property tax law, if unpaid property taxes are declared delinquent and the taxes remain unpaid, the property is declared tax-defaulted and subject to sale, as provided, if not redeemed by the owner within a certain amount of time. Existing property tax law authorizes any party of interest in property that is sold as a tax-defaulted property to file a claim with the county for the excess proceeds, as described. Existing law requires a person or entity who acts on behalf of, or in place of, any party of interest with respect to filing a claim for any excess proceeds to submit proof with the claim of certain disclosures, including that the party of interest has been advised of their right to file a claim for the excess proceeds on their own behalf directly with the county at no cost. Existing law requires a claim submitted as described above to contain any information and proof deemed necessary by the board of supervisors to establish the claimant's rights to all or any portion of the excess proceeds. This bill would subject an agreement between a party of interest and a person or entity who acts on behalf of, or in place of, a party of interest with respect to filing a claim for any excess proceeds to additional conditions, as specified. In that regard, the bill would require the agreement to, among other things, be in writing and to be signed by the party of interest after receipt of specified information. The bill would exempt specified parties of interest from the provision above and would limit the provision to agreements entered into on or after January 1, 2027. This bill would authorize the county to allow a claimant to correct any insubstantial deficiency in the documentation submitted with the claim as described above, as specified.

Issues: ✓ Budget & Taxes

Bill status passed 3 of 5 stages cleared

Introduction

Feb 2026

Committee Review

Jun 2026

Assembly Passage

May 2026

Senate Passage

Governor

Introduced Feb 20, 2026 Last action Jun 24, 2026

Maddy AI version diff · 3 comparisons

What changed between versions

06/18/26 - Amended Senate → AB2705 · 4 edits

MODERATE

The Senate amendment to AB 2705 made three substantive changes to the new Section 4675.2 governing agreements between parties of interest and third-party claim filers for tax-defaulted property excess proceeds. Most significantly, it doubled the maximum allowable fee cap from 10 percent to 20 percent of excess proceeds awarded, broadened the pre-approval payment prohibition to cover all forms of compensation (not just 'fees'), and added an explicit cross-reference to the exemption provision in subdivision (c). These changes make the bill more permissive toward third-party claim filers while maintaining consumer protections.

REQUIREMENT

The maximum fee or compensation a third-party claim filer may charge was increased from 10 percent to 20 percent of the excess proceeds awarded to the party of interest. This doubles what these service providers can legally earn.

The prohibition on requiring payment before the claim is approved and proceeds are paid out was expanded from covering only a 'fee' to covering any 'fee, cost, charge, or other compensation.' This closes a potential loophole where providers could label upfront payments as something other than a fee.

DEFINITION

The 20 percent cap in subdivision (D) was clarified to explicitly include 'all fees, costs, charges, and other compensation' in the calculation, ensuring the cap applies to the total amount paid rather than just a labeled fee component.

SCOPE

The opening of Section 4675.2(a)(1) now reads 'Except as provided in subdivision (c), an agreement...' instead of simply 'An agreement...', making the cross-reference to the exemption for banks, thrifts, credit unions, and bankruptcy estates more prominent at the start of the validity requirements.

02/20/26 - Introduced → 05/04/26 - Amended Assembly · 5 edits · May 4, 2026

MODERATE

The amended version of AB 2705 retains the existing requirement for proof of disclosures when someone acts on behalf of a property owner filing an excess proceeds claim, rather than deleting it as the introduced version proposed. It also significantly expands the new Section 4675.2 by adding a detailed 'clearly and conspicuously disclose' obligation with specific formatting rules (12-point type, separate document, signed), requiring disclosure of the actual amount of excess proceeds, and mandating that disclosures be provided in the language used during negotiation if it is not English.

REQUIREMENT

The introduced version would have deleted the existing requirement for a person acting on behalf of a party of interest to submit proof of certain disclosures with their claim. The amended version retains that requirement as Section 4675(c)(1) and adds the new agreement framework as a separate paragraph (c)(2), so both obligations now coexist.

New Section 4675.2(a)(2) requires any person or entity entering into an agreement to clearly and conspicuously disclose: the assessor's parcel number and situs, that excess proceeds are in the county's delinquent tax sale trust fund, the amount of excess proceeds, the phone number and address to file a claim, and the right to file at no cost. The disclosure must be printed in at least 12-point type, clearly separate from any other document, and signed by the party of interest.

If the transaction is negotiated primarily in a language other than English, the required disclosure must also be provided in that language. This is a new language access requirement not present in the introduced version.

The amended version adds a requirement to disclose the actual amount of excess proceeds, which was not included in the introduced version's list of required disclosures.

DEFINITION

The validity conditions in Section 4675.2(a)(1) were narrowed from five conditions to three: the agreement must be in writing and signed after receipt of disclosure, must not require pre-payment of fees, and must cap compensation at 10 percent of excess proceeds awarded. The requirement that the agreement 'clearly advises' the party of interest of their right to file at no cost was removed from the validity conditions and moved into the separate disclosure obligation in paragraph (2).

05/04/26 - Amended Assembly → 06/18/26 - Amended Senate · 6 edits · Jun 18, 2026

MODERATE

The Senate amendment to AB 2705 makes several substantive changes to the rules governing agreements between parties of interest and third parties who file excess proceeds claims after tax sales. Most significantly, it doubles the maximum fee cap from 10 percent to 20 percent of excess proceeds, adds a 95-day waiting period before an agreement can be signed after the property sale, expands required disclosures to include all fees and costs, exempts financial institutions and bankruptcy estates from the new rules, and allows counties to permit correction of minor documentation deficiencies in claims.

REQUIREMENT

The maximum fee or compensation a third party may charge for filing an excess proceeds claim is increased from 10 percent to 20 percent of the excess proceeds awarded to the party of interest. The language is also broadened to explicitly include all fees, costs, charges, and other compensation in the cap.

A new condition requires that any agreement between a party of interest and a third-party filer be signed at least 95 days after the sale of the property. This cooling-off period is designed to prevent parties from being pressured into agreements immediately after losing their property.

The disclosure requirement for third-party filers is expanded. Previously, the filer had to disclose the amount and source of excess proceeds. Now they must also disclose all fees, costs, charges, and other compensation to be paid by the party of interest.

The prohibition on requiring payment before the claim is approved and proceeds are paid is broadened from 'a fee or other compensation' to 'a fee, cost, charge, or other compensation,' closing a potential loophole.

ELIGIBILITY

A new exemption carves out two categories of parties of interest from the agreement requirements in Section 4675.2: (1) state or federally chartered banks, thrifts, savings associations, industrial loan companies, and credit unions, and (2) bankruptcy estates administered by a court-appointed trustee.

TECHNICAL

A new provision allows counties to permit a claimant to correct any insubstantial deficiency in documentation submitted with a claim within five days of receiving notice (or a longer period set by county ordinance or resolution). This prevents claims from being rejected over minor paperwork errors.

Floor votes · Assembly May 21, 2026

How they voted

66–0

Passed · 13 other

Total votes 79

May 21, 2026

D Democratic59

50 Yea 9

84% Yea

R Republican20

16 Yea 4

80% Yea

Vote distribution

All Yea All Nay Mixed No data

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

Jun 24, 2026

Upper · Passed

In committee: Set, first hearing. Hearing canceled at the request of author.

upper

Jun 18, 2026

Introduced

From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on REV. & TAX.

upper

Jun 3, 2026

Committee

Referred to Com. on REV. & TAX.

upper

May 21, 2026

Lower · Passed

Read third time. Passed. Ordered to the Senate. (Ayes 67. Noes 0. Page 5233.)

lower

May 4, 2026

Lower · Passed

Read third time and amended. Ordered to third reading. (Page 4924.)

lower

Apr 28, 2026

Lower · Passed

From committee: Do pass. (Ayes 4. Noes 0.) (April 27).

lower

Mar 16, 2026

Committee

Referred to Com. on REV. & TAX.

lower

Feb 21, 2026

Lower · Passed

From printer. May be heard in committee March 23.

lower

1 primary · 1 co-sponsor