Under Proposition 13, certain transfers are exempt from reassessment. Which of the following transfers is NOT exempt and WOULD trigger a full reassessment of the property's value?
Correct Answer
D) An arm's-length sale of property to an unrelated third-party buyer for fair market value
An arm's-length sale to an unrelated third party is a change in ownership under Revenue and Taxation Code §60 and triggers a full Proposition 13 reassessment. The property's assessed value is reset to current fair market value — typically the purchase price — which becomes the new base year value under Cal. Const. Art. XIII A, §2.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Title insurance is a policy that protects the insured party against financial loss from defects in title that were not discovered during the title search. Unlike other insurance, it covers past events rather than future risks.
A title search is an examination of public records to determine the history of ownership, liens, encumbrances, and other interests affecting a property. It verifies that the seller has the legal right to transfer the property.
A transfer tax is a tax imposed by state, county, or local government on the transfer of real property from one owner to another. It is typically based on the sale price or a flat rate per dollar of consideration.
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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?
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- → 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?
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Previous Question
A California homeowner sells a property in 2025 for $1,200,000. The property was purchased in 1995 and has been assessed under Proposition 13 since then. What happens to the property's assessed value when the new buyer takes ownership?
Next Question
A California property sells for $650,000, with the buyer assuming an existing loan of $200,000. The county documentary transfer tax at $1.10 per $1,000 is calculated on the amount of consideration excluding the assumed loan. What is the documentary transfer tax?