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 claimants 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 above to agreements entered into on or after January 1, 2027.

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.

This bill would delete the above-described requirement and would, instead, authorize any party of interest to enter into an agreement with any person or entity to act on behalf of the party of interest with respect to filing a claim for any excess proceeds. The 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 condition the validity of an require the agreement entered as described above on certain conditions, including that the agreement clearly advises the party of interest of their right to file a claim for the excess proceeds on their own behalf directly with the county at no cost. to, among other things, be in writing and to be signed by the party of interest after receipt of specified information. The bill would limit the provision above to agreements entered into on or after January 1, 2027.

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 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.

This bill would delete the above-described requirement and would, instead, authorize any party of interest to enter into an agreement with any person or entity to act on behalf of the party of interest with respect to filing a claim for any excess proceeds. The bill would condition the validity of an agreement entered as described above on certain conditions, including that the agreement clearly advises the party of interest of their right to file a claim for the excess proceeds on their own behalf directly with the county at no cost. The bill would limit the provision above to agreements entered into on or after January 1, 2027.

SENATE COMMITTEE ON REVENUE AND TAXATION

Senator Jerry McNerney, Chair

2025 - 2026 Regular

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

Limits the validity of agreements between asset locators and parties of interest to locate, deliver, or recover excess proceeds from tax sales.

Background

Property taxes are due in two installments: November 1 and February 1, with delinquency for the second installment occurring on April 10. Generally, state law requires county tax collectors to begin imposing penalties for nonpayment of property taxes of 10% of each amount due, plus administrative charges, once taxes become delinquent. If a property owner does not pay the property taxes due in the current fiscal year before June 30^th, their property becomes tax-defaulted and can be subject to tax sale to satisfy outstanding taxes, penalties, and administrative charges.

Tax sales. Tax sales deprive persons of property ownership, so the Legislature has added specific procedural requirements to ensure that tax collectors notify delinquent taxpayers when their property is subject to tax sale and offer them an opportunity to retain their property. Among these, tax collectors must first send a notice of impending default, then a notice of default, to taxpayers whose property may be subject to tax sale by registered mail to the taxpayer’s last known address. During the period between the property being declared in default and the sale of the property, the property owner has a right to redeem the status of the property by paying the “redemption amount,” equal to the total of all taxes, assessments, penalties, and fees. Tax collectors can also offer delinquent taxpayers installment agreements to cure a default before a tax sale.

The tax collector can then sell a residential property that has been in default for five years, or three years for a commercial property, unless the board of supervisors sets a five-year period for commercial property. However, the tax collector must sell property within four years of it being subject to sale. To conduct a tax sale, the tax collector must transmit to the board of supervisors a notice of the properties they intend to sell. After approval by the board of supervisors, every June 8^th, the tax collector publishes a notice of power and intent to sell all property that will be tax-defaulted with specified contents, which commences the tax sale process

The tax collector must then send notice of a proposed tax sale to the State Controller’s Office. During this period, the tax collector must also make a reasonable effort to ascertain the names and last known addresses of parties of interest to the sale, including the owner and other lienholders. Not less than 45 days nor more than 120 days before the proposed sale, the tax collector must send notice of the sale to these parties of interest. The tax collector or their agent must make a reasonable effort to contact in person any owner-occupant of a property before the tax sale, based on either a valid homeowner’s exemption or the fact that the mailing address for the last tax bill is the same address as the property. If the tax collector or their agent cannot make personal contact, they must attempt to serve written notice, no less than five days prior to the date of the sale. The tax collector then publishes the notice of tax sale, generally in a newspaper of general circulation published in the county seat and in the public notice district where the property is situated, at least 21 days before the sale. Upon completion of the sale, the property owner’s right of redemption terminates, and the title to the property is deeded to the purchaser.

Excess proceeds. After a tax sale, proceeds from the sale pay for the costs of newspaper publishing and recording fees. Funds are then distributed to pay for notices and contacting taxpayers and then to taxing agencies with valid claims. After that, proceeds satisfy liens held by parties in interest, who have one year from the date the recorder deeds the property to the purchaser.

Any party of interest can file a claim at any time prior to one year passing after the tax collector records the deed transferring from the property to the purchaser. The county board of supervisors then decides to distribute excess proceeds, after which parties of interest can then file an action or proceeding to review within 90 days.

Asset locators. Parties of interest need not file a claim for excess proceeds themselves. Instead, state law allows them to assign that right in writing so long as all facts of which that party is aware relating to the value of the right that is being assigned are disclosed. State law provides that anyone acting in place or on behalf of any party of interest must submit proof with the claim that the amount and source of excess proceeds have been disclosed to the party of interest, and 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.

Asset locators can assist parties of interest by filing a claim on their behalf. These firms argue that they use sophisticated skip-tracing technology and field investigations to locate displaced owners who would otherwise never know these funds exist. These firms argue that they are highly cost-effective options to determine the correct party of interest; locate heirs, successors, lienholders, and business entities; reconstruct missing or incomplete title and ownership records; obtain probate, trust, corporate, and estate documentation; navigate county-specific filing procedures and deadlines; resolve claim objections, deficiencies, and competing interests; and even pursue litigation for their clients when necessary to challenge wrongful claim denials.

The California Association of County Treasurer Tax Collectors (CACTTC) argue that asset locators charge excessive fees, when parties of interest can simply file claims directly with the county at no cost. Specific counties report troubling conduct from some asset locators. Specifically, Los Angeles County reports that certain companies are attempting to acquire interests in tax-defaulted properties after their sale to file claims as a purported party of interest rather than assisting the rightful claimant. In other cases, CACTTC states that asset finders submitted claims that were supported by unverifiable or fraudulent documentation and pursued litigation against counties when claims were denied. Riverside County has reported instances of asset finders misrepresenting the amount of excess proceeds available, attempting to bypass probate requirements, and using notarized affidavits in place of legally required documentation. In one case, the county alleges, a claim was submitted for the full value of the loan despite evidence that the underlying debt was already satisfied. CACTTC also points to instances where Asset Locators seek to become the executors of estates for the elderly or recently deceased.

CACTTC wants to add specific requirements as a condition of representing a party of interest seeking excess proceeds, including capping the total amount of all fees, costs, and charges paid to the representative at 20% of the excess proceeds.

Proposed Law

Assembly Bill 2705 limits the validity of agreements between asset locators and parties of interest to locate, deliver, or recover excess proceeds from tax sales. Specifically, the bill limits the ability of a party to act on behalf of or in place of a party of interest to those who have entered into an agreement with specified contents, including:

• The agreement is in writing and signed by the party of interest.
• Before signing, the party representing the party of interest must conspicuously disclose:
  • The assessor’s parcel number and situs, if available, of the property the sale of which generated the excess proceeds;
  • That the excess proceeds are currently in the county’s delinquent tax sale trust fund;
  • The amount of excess proceeds;
  • The telephone number and address that the party of interest may use to file the claim for excess proceeds; and
  • That the party of interest has the right to file a claim for the excess proceeds on their own behalf directly with the county at no cost.
• The agreement cannot require the parties of interest to pay a fee or other compensation prior to approval of the claim and payment of the proceeds.
• The agreement is signed at least 95 days after the sale of the property.
• The amount paid by the party of interest including, all fees, costs, charges, and other compensation, cannot exceed 20% of the amount of excess proceeds awarded.

Disclosures of the above contents must be in at least 12-point type, separate from any other document or writing, and provided in the language in which the transaction was primarily negotiated if that language was not English. The bill provides that any agreements that do not comply with the above requirements are invalid.

AB 2705 applies to agreements entered into on or after January 1, 2027. However, its requirements do not apply when the party of interest is:

• State or federally chartered banks, thrifts, savings associations, industrial loan companies, or credit unions.
• A bankruptcy estate administered by a court-appointed trustee.

The bill allows a claimant to correct any insubstantial deficiency in the documentation submitted with the claim within five days of receipt of the notice of the insubstantial deficiency. A board of supervisors can also prescribe a longer period of time to correct insubstantial deficiencies by ordinance or resolution.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, “AB-2705 is a desperately needed piece of consumer protection legislation that will provide clarity and stronger guardrails in the excess proceeds claim process. Excess proceeds are funds that are paid to a party of interest following the sale of a tax-defaulted property they had equity in. Given that these sales involve tax-defaulted properties, these consumers are oftentimes in desperate financial situations and the funds they receive can be life changing. Individuals can file for their excess proceeds through the county the sale occurred in for free or contract with a third party, commonly known as an ‘asset finder.’ Unfortunately, there are no statewide standards governing what these asset finder companies can charge, and they often solicit consumers to sign a contract that charges exorbitant fees to reclaim proceeds they could have gotten for free. In addition, these contracts are often solicited before the county has had any opportunity to notify the party of interest of the free service they offer. To remedy this issue, AB 2705 sets out a clear regulatory framework to protect consumers from predatory practices while allowing for legitimate asset finders to continue to participate in the marketplace. These provisions include a clear disclosure requirement to notify consumers of the free county services available to them, a 20% fee cap, a prohibition on fees or compensation prior to claim approval and payment, a curing period for substantially completed claims and a 95-day freeze on contracts to allow counties to comply with statutory noticing requirements. These provisions will strengthen consumer protection and ensure that individuals facing financial difficulties are not taken advantage of when claiming the money that is rightfully theirs.”

2. Singled out? AB 2705 enacts limitations, including a cap – 20% of excess proceeds – on the total amount paid to the entity representing the party of interest, on one form of agreement between a business and a party of interest. As such, the bill enacts specific regulations in state law on one specific form of business relationship, with the argument that additional consumer protection is needed. Opponents to the bill argue that they provide a valuable service to help individuals and businesses locate and claim proceeds to which they are lawfully entitled and otherwise unaware. Opponents add that their technology and processes are very effective tools to identify property and lien priority, and capping their compensation means they will pursue fewer claims, increasing the amount of excess proceeds that would have flowed to those lawfully entitled to them. Opponents also argue that some counties’ procedures for claiming excess proceeds is difficult and cumbersome, and their experience can help them navigate this process. While the Unclaimed Property Program has a 10% cap on compensation, those entitled to property can search a centralized searchable database on the State Controller’s website, which is not the case for excess proceeds, as they are administered by California’s 58 individual counties.

3. Value added? Selling tax-defaulted property ensures that new owners can acquire property at a reasonable cost and put it to productive use. However, depriving persons of property for non-payment of taxes is severe, so state law contains specific procedures for tax collectors to follow when taking a property tax sale, conducting the sale, and dispensing with the proceeds, guided by County Tax Collectors’ Reference Manual published by the State Controller. Tax collectors are overseen by County Boards of Supervisors, who must approve tax sales and can rescind them under specified circumstances. Tax Collectors are also subject to civil litigation. Tax Collectors must try to find parties of interest, often by hiring consultants, conducting title searches, and in-house research, and notify these parties by certified mail 45 to 120 days before the sale. After the sale, tax debts and other lienholders are repaid, then funds are held in trust for one year, while the county notifies parties of interest of their right to claim the excess proceeds at their last known address, and sometimes by publishing in the newspaper. As stewards of this process, CACTTC has raised significant concerns regarding the value of asset locators in this process, and stated that aggressive tactics make it more difficult and costly for them to discharge their necessary duties. They argue that AB 2705 adds transparency that ensures that parties of interest that agree to have others locate excess proceeds for them know what they are getting into and are not overcharged.

4. Right way? Regulation of professions in state and local taxation in California varies significantly. The Internal Revenue Service licenses enrolled agents to represent taxpayers. Practicing law requires a license from the State Bar, as does the practice of accountancy from the California Board of Accountancy. CPAs and enrolled agents may not charge fees based on an income tax refund for preparing returns. The California Tax Education Council is not a government entity but seeks to enforce tax preparation standards to protect consumers. The Governor’s Office of Business and Economic Development must consider the reasonableness of the fee arrangement between the taxpayer and any third party seeking to qualify the taxpayer for a California Competes Tax Credit. Almost anyone can appear on behalf of a taxpayer before the Office of Tax Appeals. There are no formal licensure requirements or qualification requirements to represent taxpayers with property tax appeals or seeking excess proceeds from tax sales; instead, state law sets forth certain requirements, including that anyone acting in place or on behalf of any party of interest must submit proof with the claim that the amount and source of excess proceeds have been disclosed to the party of interest, and 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. Opponents argue that they comply with these notification requirements, and parties of interest continue to want their services, pointing to a multitude of positive consumer reviews. Instead, opponents argue that a state regulatory structure is a more fair and equitable way to address consumer protection concerns, as well as an errors and omission insurance requirement. The Committee may wish to consider which method of regulation is best suited for the excess proceeds claims process.

5. Recent amendments. On June 18^th, the author amended AB 2705 in the following ways:

• Increase the cap on the maximum amount of excess proceeds to be paid by a party of interest from 10% to 20%.
• Clarify that the above cap applies to all fees, costs, charges, and other compensation, not compensation after costs are deducted.
• Allow a claimant to correct any insubstantial deficiency in the documentation submitted with the claim within five days of receipt of the notice of the insubstantial deficiency.
• Allow a board of supervisors to prescribe a longer period of time to correct insubstantial deficiencies by ordinance or resolution.
• Provide that agreements are only valid when entered into 95 days after the tax sale, so the county can notify a party of interest of excess proceeds before they enter into an agreement with another entity for compensation.
• State that the bill’s provisions do not apply to agreements with parties of interest that are state or federally chartered banks, thrifts, savings associations, industrial loan companies, or credit unions.
• State that the bill’s provisions also do not apply to a bankruptcy estate administered by a court-appointed trustee.

6. Being interesting. Asset locators assert that even when counties approve claims for excess proceeds for parties of interest they represent, they are slow to issue payments. Counties do not currently pay interest on claims. To help provide an incentive for counties to expedite payments, the Committee may wish to consider amending AB 2705 to require payment of interest on approved claims if 60 days have passed from the deadline for actions or proceedings to commence against the board of supervisors.

7. Related legislation. Last year, the Legislature enacted AB 418 (Wilson), which enacted new requirements on counties before a property can be sold pursuant to a “Chapter 8” tax sale.

Assembly Actions

Assembly Revenue & Taxation Committee: 4-0
Assembly Floor: 67-0

Support and Opposition

(6/18/26)

Support: California Association of County Treasurers and Tax Collectors (Sponsor)
California State Association of Counties (Co-Sponsor)
Rural County Representatives of California (Co-Sponsor)
Urban Counties of California (Co-Sponsor)
City and County of San Francisco
County of Kern
County of Merced
County of Monterey
County of Sacramento
County of San Joaquin
County of Solano
County of Stanislaus

Opposition: Asian Industry B2B

Asset Recovery, Inc.

CalAsian Chamber of Commerce
California African American Chamber of Commerce
California Business Roundtable
California Hispanic Chambers of Commerce
California Small Business Association

Choice Plus
Downey Brand
Dyer Law Firm
Estate Research Associates

Flasher Barricade Association
Global Discoveries, LTD
Independent Insurance Agents and Brokers of California

James Law Group
KGM Group

National Federation of Independent Business – California

Orchard

San Juan Capistrano Chamber of Commerce

The Struck Firm

34 Individuals

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2705

Author:(Dixon)

As Amended Ver:May 04, 2026

Majority vote

SUMMARY

Specifies certain requirements for any agreement between a party of interest and a person or entity who acts on behalf of a party of interest with respect to filing a claim for any excess proceeds from a tax-defaulted property sale.

Major Provisions

1. Provides that an agreement to locate, deliver, or recover excess proceeds, or assist in the filing of an excess proceeds claim, is valid only if it meets all of the following conditions:
   1. The agreement is in writing and is signed by the party of interest after receipt of a specified disclosure;
   2. The agreement does not require the party of interest to pay a fee or other compensation prior to approval of the claim and payment of the excess proceeds to the party of interest; and,
   3. The agreed-upon fee or compensation to be paid by the party of interest is not in excess of 10% of the amount of excess proceeds awarded to the party of interest.
2. Provides that any person or entity who enters into an agreement with a party of interest that is subject to this bill shall clearly and conspicuously disclose all of the following to the party of interest:
   1. The assessor's parcel number and situs, if available, of the property the sale of which generated the excess proceeds;
   2. That the excess proceeds are currently in the county's delinquent tax sale trust fund;
   3. The amount of excess proceeds;
   4. The telephone number and address that the party of interest may use to file the claim for excess proceeds; and,
   5. That the party of interest has the right to file a claim for the excess proceeds on their own behalf directly with the county at no cost.
3. Provides that the disclosure required by this bill shall be printed in at least 12-point type, shall be clearly separate from any other document or writing, and shall be signed by the party of interest. If the transaction is negotiated primarily in a language other than English, the disclosure required by this bill shall also be provided in that language.
4. Provides that these requirements shall apply only to an agreement entered into on or after January 1, 2027.

COMMENTS

Tax-defaulted property sales: Existing law generally deems real property for which taxes have not been paid by July 1st in default. After a certain period, depending on the type of property, the defaulted property becomes subject to the power to sell by the tax collector. The tax collector is required to issue notices to the last known assessee, generally the owner, of defaulted property informing them of the property's status, and to subsequently inform the last known assessee of the intent to sell the property at auction, after certain requirements are met. According to the County Tax Collectors' Reference Manual, published by the State Controller, current tax sale practice allows the title of tax-defaulted property to remain with the property owner or successor in interest while the property is subject to the tax collector's power to sell; ownership terminates upon completion of the tax sale by the tax collector and payment of the purchase amount. During the period between the property being declared in default and the sale of the property, the property owner has a right to redeem the status of the property by paying all taxes, assessments, penalties, and fees. Upon completion of the sale, however, this right terminates, and the title to the property is deeded to the purchaser. The property must be sold at the minimum bid price unless certain circumstances apply. Any party of interest in the property may claim the excess proceeds resulting from the sale of a property up to one year after the date of the sale. If no party of interest claims the excess proceeds after a period of one year, the balance may be transferred to the county general fund after reimbursing certain costs incurred by specified entities.

The Unclaimed Property (UP) Law: The UP Law provides for the "escheat," or return of unclaimed or abandoned property, to the state in certain instances. Under that law, third parties filing a claim on the behalf of owners of property subject to escheatment must include certain elements within the agreement and limit any compensation to 10% of the value of the property. This requirement was enacted by AB 2280 (Reyes), Chapter 282, Statutes of 2022. In its analysis of AB 2280, the Assembly Committee on the Judiciary noted that there may be instances where owners pre-paid an asset finder, when that owner was not entitled to the full value of the property they were claiming, the current value of the property was less than described to the owner, or the owner was not entitled to claim the property at all.

This bill: As currently drafted, this bill seeks to impose similar requirements on asset finders claiming excess proceeds on behalf of parties of interest as are imposed under the UP Law. On the one hand, there does appear to be merit to the proponents' contentions. It does appear that there are potentially abusive actions being taken by asset finders. The extent to which these actions are a knowing and willing violation of the law is beyond the scope of this analysis. On the other hand, depending on the type of property and circumstances of its tax-default status, the complexity noted by the opponents in properly determining parties of interest is valid.

According to the Author

"AB 2705 would protect consumers by establishing a uniform statewide framework for agreements to locate, recover, deliver, or assist in filing excess proceeds claims by requiring a written agreement between the party of interest and the third party; by requiring specific disclosures, including the property information and how to file directly with the county; by requiring the agreement to clearly advise the party of interest that they may file directly with the county at no cost; by prohibiting fees or compensation before approval and payment of the claim; and by applying these requirements to agreements entered into on or after January 1, 2027. This legislation creates necessary regulatory guardrails to limit the ability of bad actors to abuse the excess proceeds process for profit while still allowing asset finder companies to assist consumers in claiming their excess proceeds."

Arguments in Support

The California Association of County Treasurers and Tax Collectors, and the Rural County Representatives of California, writing as the sponsors of this bill as originally introduced, state, in part:

Current law allows any party of interest in a tax-defaulted property sold at auction to file a claim with the county for excess proceeds of more than $150 within one year of the tax collector's deed being recorded. Private "asset finder" companies have moved into this space, offering a "middle man" service to consumers to file these claims, on which they collect a fee, when consumers are able to file a claim with the county themselves free of charge. In many cases, these companies charge significant or excessive fees for what is largely an administrative process, and consumers may not be aware that they can recover these funds on their own at no cost. Additionally, there are currently no statewide standards governing these practices, creating a gap in consumer protections.

[…]

Counties across California are required to conduct tax-defaulted property sales, meaning this issue impacts every county and a wide range of taxpayers. County reports have identified recurring concerns with asset finder companies, including misleading representations, aggressive solicitation practices, and attempts to improperly establish themselves as parties of interest. Without clear statewide standards, these practices can undermine the integrity of the excess proceeds process and reduce the funds ultimately returned to rightful claimants.

Arguments in Opposition

Global Discoveries, Ltd., writing in opposition to this bill as introduced, states, in part:

Excess proceeds recovery is not comparable to locating ordinary escheated funds on a public website. These matters often require real estate research, full title analysis and title reports, skip tracing, genealogical research, probate and heirship work, business-entity investigation, lien analysis, document reconstruction, and sometimes private investigative work. In many cases, the rightful claimant is not obvious, and the work requires a complete analysis of all parties of interest before a claim can responsibly be filed. Some matters are straightforward; others requires years of specialized experience and coordinated work across multiple disciplines. A single fee cap applied to all these very different matters does not reflect the reality of the work.

FISCAL COMMENTS

None. This bill is keyed non-fiscal.

VOTES

ASM REVENUE AND TAXATION: 4-0-3

YES: Gipson, Sanchez, DeMaio, Michelle Rodriguez

ABS, ABST OR NV: Carrillo, McKinnor, Quirk-Silva

UPDATED

VERSION: May 04, 2026

CONSULTANT: M. David Ruff / REV. & TAX. / (916) 319-2098 FN: 0002468

ASSEMBLY THIRD READING

ATR Bill Id:AB 2705

Author:(Dixon)

As Introduced Ver:February 20, 2026

Majority vote

SUMMARY

Replaces the requirement to provide proof that an interested party has the right to file a claim for excess proceeds directly with the county at no cost with an agreement subject to certain requirements.

Major Provisions

1. Requires any agreement between a party of interest and any person or entity acting on behalf of a party of interest to file a claim for excess proceeds to:
   1. Be in writing;
   2. Disclose the relevant assessor's parcel number and situs, if available, disclose that the excess proceeds are currently in the county's delinquent tax sale trust fund, and disclose the phone number and address which the party of interest may use to file the claim for excess proceeds;
   3. Be signed by the party of interest after receipt of the above listed disclosure requirements;
   4. Clearly advise the party of interest of their right to file a claim for the excess proceeds on their own behalf with the county at no cost;
   5. Ensure the party of interest is not required to pay a fee or other compensation prior to approval of the claim and payment of the excess proceeds to the party of interest; and,
   6. Limit any agreed-upon fee or compensation to no more than 10% of the amount of excess proceeds awarded to the party of interest.
2. Deletes the requirement that a third party filing a claim for excess proceeds on behalf of a party of interest inform the party of interest of the right to file a claim directly with the county at no cost.
3. Provides that this bill must not be construed to prevent an owner from asserting, at any time, that an agreement to file a claim for excess proceeds is based upon an excessive or unjust consideration.
4. Applies the provisions of this bill to agreements entered into on or after January 1, 2027.

COMMENTS

Tax-defaulted property sales: Existing law generally declares real property for which taxes have not been paid by July 1st in default. After a certain period, depending on he type of property, the defaulted property becomes subject to the power to sell by the tax collector. The tax collector is required to issue notices to the last known assessee, generally the owner, of defaulted property informing them of the property's status, and to subsequently inform the last known assessee of the intent to sell the property at auction, after certain requirements are met. According to the County Tax Collectors' Reference Manual, published by the State Controller, current tax sale practice allows the title of tax-defaulted property to remain with the property owner or successor in interest while the property is subject to the tax collector's power to sell; ownership terminates upon completion of the tax sale by the tax collector and payment of the purchase amount. During the period between the property being declared in default and the sale of the property, the property owner has a right to redeem the status of the property by paying all taxes, assessments, penalties, and fees. Upon completion of the sale, however, this right terminates, and the title to the property is deeded to the purchaser. The property must be sold at the minimum bid price unless certain circumstances apply. Any party of interest in the property may claim the excess proceeds resulting from the sale of a property up to one year after the date of the sale. If no party of interest claims the excess proceeds after a period of one year, the balance may be transferred to the county general fund after reimbursing certain costs incurred by specified entities.

The Unclaimed Property (UP) Law: The UP Law provides for the "escheat," or return of unclaimed or abandoned property, to the state in certain instances. Under that law, third parties filing a claim on the behalf of owners of property subject to escheatment must include certain elements within the agreement and limit any compensation to 10% of the value of the property. This requirement was enacted by AB 2280 (Reyes), Chapter 282, Statutes of 2022. In its analysis of AB 2280, the Assembly Committee on the Judiciary noted that there may be instances where owners pre-paid an asset finder, when that owner was not entitled to the full value of the property they were claiming, the current value of the property was less than described to the owner, or the owner was not entitled to claim the property at all.

This bill: As currently drafted, this bill seeks to impose similar requirements on asset finders claiming excess proceeds on behalf of parties of interest as are imposed under the UP Law. On the one hand, there does appear to be merit to the proponents' contentions. It does appear that there are potentially abusive actions being taken by asset finders. The extent to which these actions are a knowing and willing violation of the law is beyond the scope of this analysis. On the other hand, depending on the type of property and circumstances of its tax-default status, the complexity noted by the opponents in properly determining parties of interest is valid.

According to the Author

AB 2705 would protect consumers by establishing a uniform statewide framework for agreements to locate, recover, deliver, or assist in filing excess proceeds claims by requiring a written agreement between the party of interest and the third party; by requiring specific disclosures, including the property information and how to file directly with the county; by requiring the agreement to clearly advise the party of interest that they may file directly with the county at no cost; by prohibiting fees or compensation before approval and payment of the claim; and by applying these requirements to agreements entered into on or after January 1, 2027. This legislation creates necessary regulatory guardrails to limit the ability of bad actors to abuse the excess proceeds process for profit while still allowing asset finder companies to assist consumers in claiming their excess proceeds.

Arguments in Support

The California Association of County Treasurers and Tax Collectors (CACTTC), and the Rural County Representatives of California, writing as the sponsors of this bill, state, in part:

Current law allows any party of interest in a tax-defaulted property sold at auction to file a claim with the county for excess proceeds of more than $150 within one year of the tax collector's deed being recorded. Private "asset finder" companies have moved into this space, offering a "middle man" service to consumers to file these claims, on which they collect a fee, when consumers are able to file a claim with the county themselves free of charge. In many cases, these companies charge significant or excessive fees for what is largely an administrative process, and consumers may not be aware that they can recover these funds on their own at no cost. Additionally, there are currently no statewide standards governing these practices, creating a gap in consumer protections.

[…]

Counties across California are required to conduct tax-defaulted property sales, meaning this issue impacts every county and a wide range of taxpayers. County reports have identified recurring concerns with asset finder companies, including misleading representations, aggressive solicitation practices, and attempts to improperly establish themselves as parties of interest. Without clear statewide standards, these practices can undermine the integrity of the excess proceeds process and reduce the funds ultimately returned to rightful claimants.

Arguments in Opposition

Global Discoveries, Ltd., writing in opposition to this bill, states, in part:

Excess proceeds recovery is not comparable to locating ordinary escheated funds on a public website. These matters often require real estate research, full title analysis and title reports, skip tracing, genealogical research, probate and heirship work, business-entity investigation, lien analysis, document reconstruction, and sometimes private investigative work. In many cases, the rightful claimant is not obvious, and the work requires a complete analysis of all parties of interest before a claim can responsibly be filed. Some matters are straightforward; others requires years of specialized experience and coordinated work across multiple disciplines. A single fee cap applied to all these very different matters does not reflect the reality of the work.

FISCAL COMMENTS

None.

VOTES

ASM REVENUE AND TAXATION: 4-0-3

YES: Gipson, Sanchez, DeMaio, Michelle Rodriguez

ABS, ABST OR NV: Carrillo, McKinnor, Quirk-Silva

UPDATED

VERSION: February 20, 2026

CONSULTANT: Harrison Bowlby / REV. & TAX. / (916) 319-2098 FN: 0002445

Date of Hearing: April 27, 2026

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Mike Gipson, Chair

ABPCA Bill Id:AB 2705 (

Author:Dixon) – As Introduced Ver:February 20, 2026

Majority vote.

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

SUMMARY: Applies additional requirements to agreements for claims of excess proceeds filed by third parties on behalf of parties of interest. Specifically, this bill:

1. Requires any agreement between a party of interest and any person or entity acting on behalf of a party of interest to file a claim for excess proceeds to:
   1. Be in writing;
   2. Disclose the relevant assessor's parcel number and situs, if available, disclose that the excess proceeds are currently in the county's delinquent tax sale trust fund, and disclose the phone number and address which the party of interest may use to file the claim for excess proceeds;
   3. Be signed by the party of interest after receipt of the above listed disclosure requirements;
   4. Clearly advise the party of interest of their right to file a claim for the excess proceeds on their own behalf with the county at no cost;
   5. Ensure the party of interest is not required to pay a fee or other compensation prior to approval of the claim and payment of the excess proceeds to the party of interest; and,
   6. Limit any agreed-upon fee or compensation to no more than 10% of the amount of excess proceeds awarded to the party of interest.
2. Provides that this bill must not be construed to prevent an owner from asserting, at any time, that an agreement to file a claim for excess proceeds is based upon an excessive or unjust consideration.
3. Applies the provisions of this bill to agreements entered into on or after January 1, 2027.

EXISTING LAW:

1. Requires taxpayers to pay their property tax bills on real property in two installments, which become delinquent on December 10 and April 10, respectively, and subject to penalties. (Revenue & Taxation Code (R&TC) Sections 2617 and 2617.)
2. Declares real property, except tax-defaulted property or property that is a possessory interest, for which the taxes, assessments, and penalties have not been paid on July 1 to be in default. (R&TC Section 3436.)
3. Requires tax collectors to mail to the last known assessee of the property a notice of default and of the power to sell the property by the county for nonpayment of taxes. The tax collector must make a reasonable effort to ascertain the address of the last assessee of the tax-defaulted property. (R&TC Section 3365.)
4. Requires a tax collector to sell an unredeemed tax-defaulted property after a certain period of time, generally four years after the property is in tax-default. Any person, regardless of any prior or existing lien on, claim to, or interest in, the property may purchase it at the sale. The existing owner of the tax-defaulted property may not purchase the property for a price less than the minimum bid amount. Tax collectors must make additional notices to other entities regarding the sale. (R&TC Section 3691 et seq.)
5. Requires the minimum bid amount in a sale to be no less than the amount of the sum of defaulted taxes, delinquent penalties and costs, redemption penalties, a redemption fee, and any outstanding balance of any property tax postponement loan, as defined. (R&TC Sections 3698.5 and 3793.1.)
6. Requires a tax collector to, between 45 and 120 days before the proposed sale, notify any parties of interest that a sale will occur on a property to which they are lienholders of, or with title of, record to the property. The tax collector must make a reasonable effort to obtain the name and last known mailing address of parties of interest. (R&TC Section 3701.)
7. Requires revenues resulting from the sale of a tax-defaulted property to be allocated according to a specific schedule and stipulates that any excess proceeds may be claimed by parties of interest, which include lienholders of record and any persons with title of record to the property. Requires the county to provide notice to parties of interest within 90 days of the sale of a property if the excess proceeds are more than $150. (R&TC Sections 4675 and 4676.)
8. Invalidates an agreement to locate, deliver, recover, or assist in the recovery of unclaimed property if that agreement is entered into between the date unclaimed property is reported to the State Controller, and the date it is paid or delivered to the State Controller. Such an agreement is valid if, after payment or delivery to the State Controller, the following conditions are met:
9. The fee or compensation paid does not exceed 10% of the recovered property;
10. The owner does not have to pay the fee or compensation before the State Controller approves the claim and pays the recovered property to the owner; and,
11. The agreement discloses the nature and value of the property, that the State Controller is in possession of the property, and the address where the owner can directly claim their property from the State Controller. (Civil Code of Procedure Section 1582.)

FISCAL EFFECT: Committee staff notes that any associated revenue losses would almost certainly be below this Committee's Suspense File threshold.

COMMENTS:

1. The author has provided the following statement in support of this bill:

AB 2705 would protect consumers by establishing a uniform statewide framework for agreements to locate, recover, deliver, or assist in filing excess proceeds claims by requiring a written agreement between the party of interest and the third party; by requiring specific disclosures, including the property information and how to file directly with the county; by requiring the agreement to clearly advise the party of interest that they may file directly with the county at no cost; by prohibiting fees or compensation before approval and payment of the claim; and by applying these requirements to agreements entered into on or after January 1, 2027. This legislation creates necessary regulatory guardrails to limit the ability of bad actors to abuse the excess proceeds process for profit while still allowing asset finder companies to assist consumers in claiming their excess proceeds.

1. The California Association of County Treasurers and Tax Collectors (CACTTC), and the Rural County Representatives of California, writing as the sponsors of this bill, state, in part:

Current law allows any party of interest in a tax-defaulted property sold at auction to file a claim with the county for excess proceeds of more than $150 within one year of the tax collector's deed being recorded. Private "asset finder" companies have moved into this space, offering a "middle man" service to consumers to file these claims, on which they collect a fee, when consumers are able to file a claim with the county themselves free of charge. In many cases, these companies charge significant or excessive fees for what is largely an administrative process, and consumers may not be aware that they can recover these funds on their own at no cost. Additionally, there are currently no statewide standards governing these practices, creating a gap in consumer protections.

[…]

Counties across California are required to conduct tax-defaulted property sales, meaning this issue impacts every county and a wide range of taxpayers. County reports have identified recurring concerns with asset finder companies, including misleading representations, aggressive solicitation practices, and attempts to improperly establish themselves as parties of interest. Without clear statewide standards, these practices can undermine the integrity of the excess proceeds process and reduce the funds ultimately returned to rightful claimants.

1. Global Discoveries, Ltd., writing in opposition to this bill, states, in part:

Excess proceeds recovery is not comparable to locating ordinary escheated funds on a public website. These matters often require real estate research, full title analysis and title reports, skip tracing, genealogical research, probate and heirship work, business-entity investigation, lien analysis, document reconstruction, and sometimes private investigative work. In many cases, the rightful claimant is not obvious, and the work requires a complete analysis of all parties of interest before a claim can responsibly be filed. Some matters are straightforward; others requires years of specialized experience and coordinated work across multiple disciplines. A single fee cap applied to all these very different matters does not reflect the reality of the work.

[…]

We are also concerned that counties have a structural financial interest in unclaimed excess proceeds because funds not timely claimed revert to county general funds. Counties should act as neutral administrators, and any legislation in this area should be carefully reviewed to avoid unintended consequences that make it harder for rightful owners to recover money owed to them.

1. Committee Staff Comments:
   1. Tax-defaulted property sales: Existing law generally declares real property for which taxes have not been paid by July 1st in default. After a certain period, depending on the type of property, the defaulted property becomes subject to the power to sell by the tax collector. The tax collector is required to issue notices to the last known assessee, generally the owner, of defaulted property informing them of the property's status, and to subsequently inform the last known assessee of the intent to sell the property at auction, after certain requirements are met. According to the County Tax Collectors' Reference Manual, published by the State Controller, current tax sale practice allows the title of tax-defaulted property to remain with the property owner or successor in interest while the property is subject to the tax collector's power to sell; ownership terminates upon completion of the tax sale by the tax collector and payment of the purchase amount. During the period between the property being declared in default and the sale of the property, the property owner has a right to redeem the status of the property by paying all taxes, assessments, penalties, and fees. Upon completion of the sale, however, this right terminates, and the title to the property is deeded to the purchaser. The property must be sold at the minimum bid price unless certain circumstances apply. Any party of interest in the property may claim the excess proceeds resulting from the sale of a property up to one year after the date of the sale. If no party of interest claims the excess proceeds after a period of one year, the balance may be transferred to the county general fund after reimbursing certain costs incurred by specified entities.
   2. Patterns of behavior described by counties: Los Angeles (LA) and Riverside Counties report issues with asset finders or third parties that assist parties of interest in claiming excess proceeds. The author, in background material provided to this Committee, notes that LA County reports that certain companies are attempting to acquire interests in tax-defaulted properties after their sale in order to file claims as a purported party of interest rather than assisting the rightful claimant. In other cases, these asset finders submitted claims that were supported by unverifiable or fraudulent documentation and pursued litigation against counties when claims were seemingly appropriately denied.

Additionally, the author notes that Riverside County has reported instances of asset finders misrepresenting the amount of excess proceeds available, attempting to bypass probate requirements, and using notarized affidavits in place of legally required documentation. In one case, the county alleges, a claim was submitted for the full value of the loan despite evidence that the underlying debt was already satisfied.

• 1. Evidence in court rulings: In unpublished rulings in two cases, it appears the superior court rulings denying claims for excess proceeds were affirmed by appellate courts. In Global Discoveries, Ltd. v. Ventura County (2009), the California Second Appellate District Court affirmed the Ventura County Superior Court's decision to deny Global Discoveries' petition to compel Ventura County to disburse denied excess proceeds^[1]. The county had denied the excess proceeds claim because Global Discoveries did not have a security interest in the property and was not a party of interest. The denial by the county was upheld in the county's Superior Court and on appeal.

In Global Discoveries, Ltd. v. County of Contra Costa (2022), Global Discoveries again sought to compel a county to disburse excess proceeds of a denied claim^[2]. In this case, Contra Costa County denied the claim for failure to submit required supporting documentation within one year of the sale. The trial court sustained the county's demurrer without leave to amend. In other words, the trial court found that Global Discoveries had failed to sufficiently state a claim for relief to warrant further examination of the case. The California First Appellate District Court upheld this ruling on appeal.

While these cases are only two instances that Committee staff discovered when analyzing this bill, these cases do, to some extent, corroborate the claims made by counties; Committee staff notes that many cases of counties alleging impropriety may not be litigated. On the other hand, these cases do not evidence a systemic pattern of abuse as stated by the opponents.

• 1. The Unclaimed Property (UP) Law: The UP Law provides for the "escheat," or return of unclaimed or abandoned property, to the state in certain instances. Under that law, third parties filing a claim on the behalf of owners of property subject to escheatment must include certain elements within the agreement and limit any compensation to 10% of the value of the property. This requirement was enacted by AB 2280 (Reyes), Chapter 282, Statutes of 2022. In its analysis of AB 2280, the Assembly Committee on the Judiciary noted that there may be instances where owners pre-paid an asset finder, when that owner was not entitled to the full value of the property they were claiming, the current value of the property was less than described to the owner, or the owner was not entitled to claim the property at all.
  2. This bill: As currently drafted, this bill seeks to impose similar requirements on asset finders claiming excess proceeds on behalf of parties of interest as are imposed under the UP Law. On the one hand, there does appear to be merit to the proponents' contentions. It does appear that there are potentially abusive actions being taken by asset finders. The extent to which these actions are a knowing and willing violation of the law is beyond the scope of this analysis. On the other hand, depending on the type of property and circumstances of its tax-default status, the complexity noted by the opponents in properly determining parties of interest is valid. For property in probate, clear title may not be readily determined and determining the appropriate party of interest may be a complex, resource-intensive endeavor.
  3. Counties' financial interest in excess proceeds: While it is true that unclaimed excess proceeds revert to a county's general fund, the implied claim that tax collectors would violate the law to gain these excess proceeds because of a structural financial interest seems specious. As noted by the CACTTC, LA County, the largest county in California, is holding approximately $7 million annually in excess proceeds. Riverside County is reported to hold approximately $11 million. For context, LA County's proposed 2026-27 fiscal year budget is $48.8 billion, and Riverside County's is $10 billion. Committee staff questions whether county tax collectors would be willing to violate state law and open themselves to liability for fractions of a percentage of their county's overall budget.

REGISTERED SUPPORT / OPPOSITION:

Support

California Association of Treasurers and Tax Collectors

California State Association of Counties

Rural County Representatives of California

Urban Counties of California

Opposition

Global Discoveries, Ltd.

Analysis Prepared by: Harrison Bowlby / REV. & TAX. / (916) 319-2098

1. Glob. Discoveries v. Ventura Cty., No. B214357, 2009 Cal. App. Unpub. LEXIS 9553 (Dec. 2, 2009). ↑

2. Glob. Discoveries, Ltd. v. Cty. of Contra Costa, No. A160787, 2022 Cal. App. Unpub. LEXIS 4649 (July 27, 2022). ↑