A California property is reassessed at $950,000 following a change in ownership. Under Proposition 13, what is the maximum amount by which the assessed value may increase in any single subsequent year?
Correct Answer
A) 2% per year, or the California CPI rate, whichever is less
Under California Proposition 13 (California Constitution, Article XIII A), the assessed value of a property may not increase by more than 2% per year or the rate of inflation as measured by the California Consumer Price Index (CPI), whichever is less. The $950,000 reassessment becomes the new base year value, and all future annual increases are capped at this lower-of-2%-or-CPI standard until the next change in ownership or completion of new construction triggers a new reassessment.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A bargain and sale deed implies that the grantor holds title and possession of the property but does not include warranties against encumbrances or title defects.
The chain of title is the sequential history of all transfers of ownership for a specific property, from the original source (typically a government patent or grant) to the present owner. An unbroken chain is essential for marketable title.
The closing process, also called settlement, is the final step in a real estate transaction where documents are signed, funds are disbursed, and title is officially transferred from the seller to the buyer.
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- → A buyer records a deed at the county recorder's office. What is the primary purpose of recording?
- → A buyer drives past the property and sees someone other than the seller living there and maintaining the yard. This observation should put the buyer on what type of notice?
- → In a covered purchase transaction, the borrower receives a final form showing the loan terms, cash to close, and settlement charges shortly before consummation. What form is this?
- → Along with the signed offer, Quinn Brooks delivers a check to demonstrate serious intent to complete the transaction if the offer is accepted. What is this deposit called?
- → On a settlement statement, the buyer's earnest money reduces the remaining cash needed to close. How is that item characterized?
- → On a settlement statement, an item increases the buyer's amount due at closing. How is that item characterized?
- → On the seller's settlement statement, the purchase price of $400,000 appears as what?
- → At closing, the purchase price of $350,000 appears on the buyer's side of the settlement statement. Is this amount a debit or a credit to the buyer?
- → Under TRID rules, the lender must deliver the Closing Disclosure to the borrower at least how many business days before loan consummation?
- → In an escrow closing, the escrow agent discovers that the seller has not yet provided the signed deed. What should the escrow agent do?
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Previous Question
A property in Los Angeles County, California, sells for $800,000. The county documentary transfer tax rate is $1.10 per $1,000 of consideration. What is the county documentary transfer tax due at recording?
Next Question
A home in San Francisco sells for $1,500,000. Under San Francisco's current transfer tax ordinance, the applicable city transfer tax rate for properties valued between $1,000,000 and $4,999,999 is $6.80 per $1,000 of value, and the California county documentary transfer tax rate is $1.10 per $1,000. What is the total combined transfer tax due at closing?