A PRACTITIONER’S GUIDE TO THE CHANGE IN OWNERSHIP RULES

By Frayda L. Bruton, Esq.^*

Prior to enactment of Proposition 13 in 1978, all real property was assessed at market value each year.¹ The only certainty a property owner had was that each year the local government would prepare its budgets for the upcoming fiscal year, and each year the tax bill would indicate whether the county had a surplus or deficit. In its 1977-78 Annual Report, the State Board of Equalization found that assessed values in California tripled in the 16 years prior to 1978 and that tax rates increased 51%.² Much of the burden fell on homeowners. Home prices escalated to nearly double the national average.³

Taxpayer revolt was inevitable. In 1978, angry voters enacted Proposition 13 that added Article XIIIA to the California Constitution. Real property values were rolled back to their 1975-76 assessed values in the absence of new construction or a "change in ownership." Article XIIIA also provided for a reassessment in the event of a purchase, which the Legislature defined as a "change in ownership for consideration."⁴

This article reviews the current state of law in view of the original proposition, subsequent voter-approved propositions, enabling legislation, rulings by the State Board of Equalization, and litigation.