The opinion
Filed 9/26/13
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION ONE
RICHARD N. BENSON, as Assessor-
Recorder, etc., A134340
Plaintiff and Appellant,
(Marin County Super. Ct.
v. No. CV 1003775)
MARIN COUNTY ASSESSMENT
APPEALS BOARD,
Defendant;
JAMES D. MIKKELSEN,
Real Party in Interest and
Respondent.
I. INTRODUCTION
Under article XIII A of the California Constitution (popularly known as Prop. 13),
the most common trigger of the reassessment of real property is a ―change in ownership.‖
The initiative measure, itself, did not define change in ownership, leaving that task to the
Legislature, which promptly appointed a task force to make recommendations. At the
time the initiative measure was approved by California voters, joint tenancies were
commonly used as an estate planning tool—parents would deed property to themselves
and their children so it would pass automatically to the latter upon the death of the last
surviving parent. The task force therefore proposed treating ―family‖ joint tenancies akin
to the making of a will. Since there is no change in ownership on the mere making of a
will, there similarly would be no change in ownership on the creation of a family joint
tenancy. Rather, change in ownership would occur when the joint tenancy terminated,
frequently on the death of the last surviving parent. The Legislature adopted the task
1
force‘s recommendations, and the Legislature and the State Board of Equalization have
spent the ensuing decades refining the notion that there is no change in ownership when a
family joint tenancy is created, but there is on termination.
In this case, after one of two brothers inherited a residential property from their
mother, he created a joint tenancy with his brother. Nearly a decade later, the second
brother deeded his own joint tenancy interest to himself as a tenant in common with his
brother. Although he and his brother continued to own the property and retained the
same percentage ownership as before, the Marin County Tax Assessor determined a
change in ownership had occurred, reassessed the property and sent the second brother,
real party in interest James Mikkelsen, a tax bill. Mikkelsen appealed to the Assessment
Appeals Board, claiming a mere change in the way title was held was not a change in
ownership. The Board agreed with Mikkelsen. The Assessor sought a writ of review
from the trial court. The court also agreed with Mikkelsen. The Assessor now appeals to
this court, supported by the State Board of Equalization as amicus curiae.
As Mikkelsen points out, the Legislature has, indeed, specified a mere change in
the way title is held is not a change in ownership when it comes to most property, and
there certainly is logic to that approach. However, as we will explain, from the time the
Legislature enacted the change in ownership statutes implementing Proposition 13, it has
treated family joint tenancies differently. While the wisdom of the policy reason for that
differential treatment—to accommodate the use of joint tenancy as an estate planning
tool—may be a matter of debate, it was within the Legislature‘s prerogative to craft the
change in ownership statutes accordingly. What Mikkelsen, the Board and the trial court
overlooked was that Mikkelsen got the advantage of this policy when his brother created
the joint tenancy and no change in ownership was deemed to have occurred. The price
for that property tax break, so to speak, was a change in ownership when the family joint
tenancy was terminated. We therefore reverse the judgment of the trial court.
II. FACTUAL AND PROCEDURAL BACKGROUND
When Peter and James Mikkelsen‘s father died in the mid 1950‘s, he left a home
in Mill Valley to their mother, Dagmar Mikkelsen. She subsequently created a joint
2
tenancy in the property with Peter. When Dagmar died in July, 1997, Peter became the
sole owner of the property by right of survivorship. In December, Peter created a joint
tenancy in the property with James. As a result, each had a 50 percent undivided interest
in the property and reciprocal rights of survivorship. The brothers owned the home as
joint tenants for a decade. In November 2007, James ―severed his interest as a joint
tenant‖ by executing and recording a grant deed wherein he granted ―to himself an
interest as a tenant in common.‖
The Marin County Assessor determined James‘ transfer of his joint tenancy
interest to himself as a tenant in common, was a change in ownership triggering
reassessment under Proposition 13. The assessed value of the property was determined to
be $525,323, significantly higher than its previously assessed value of $100, 631 and
resulting in a tax increase of $2,682.84.
James challenged the reassessment and sought a tax refund, on the ground, inter
alia, the change in legal title from joint tenancy to tenancy in common did not constitute a
change in ownership. The Assessor rejected his challenge. James appealed to the
Assessment Appeals Board for Marin County. By a vote of two to one, the Board
reversed the Assessor‘s decision and returned the property‘s assessed value to $100,631.
The Assessor petitioned the Marin County Superior Court for a writ of review of the
Board‘s decision, which the court denied. The Assessor timely appealed to this court.
III. DISCUSSION
Proposition 13 specifies: ―The maximum amount of any ad valorem tax on real
property shall not exceed one percent (1%) of the full cash value of such property.‖ (Cal.
Const. art. XIII A, § 1, subd. (a).) The measure defines ―full cash value‖ to mean ―the
appraised value of real property when purchased, newly constructed, or a change in
ownership has occurred after the 1975 assessment.‖ (Cal. Const. art. XIII A, § 2, subd.
(a), italics added.) Of the three ―value benchmarks under Proposition 13‖ (i.e., the 1975
base, change in ownership, and new construction), change in ownership is ―by far the
most important, as it is the primary reappraisal ‗trigger‘ under Article XIII A.‖ (Assem.
Revenue and Taxation Com., Rep. of the Task Force on Property Tax Administration
3
(January 22, 1979) (Task Force Report), p. 37.) It thus is no surprise that ―[t]he most
complex area of law implementing Proposition 13 is the attempt to define ‗change in
ownership.‘ ‖ (Assem. Revenue and Taxation Com., Rep. of the Implementation of
Proposition 13, Vol. 1, Property Tax Assessment (October 29, 1979) (Implementation
Report), p. 18.1)
Statutory Definition of “Change in Ownership”
―Proposition 13 did not explicate the meaning of ‗change in ownership.‘ ‖
(Pacific Southwest Realty Co. v. County of Los Angeles (1991) 1 Cal.4th 155, 161
[2 Cal.Rptr.2d 536, 820 P.2d 1046] (Pacific Southwest).) That task was left to the
Legislature which, ―the year after article XIII A‘s passage, . . . adopted a statutory
framework for implementing it.‖ (Steinhart v. County of Los Angeles (2010) 47 Cal.4th
1298, 1321 [104 Cal.Rptr.3d 195, 223 P.3d 57]; see also Pacific Southwest, supra,
1 Cal.4th at pp. 160–161.) It was understood this initial legislation, enacted through
Senate Bill No. (SB) 154, would be followed by more extensive legislation. (See
Implementation Report, p. 18.)
The Task Force Report
As a prelude to drafting the more comprehensive legislation, the Legislature
appointed a 35-member Task Force consisting of ―legislative and board staff, county
assessors . . . , trade associations, and lawyers in the public and private sectors‖ to ―create
consistent and uniform guidelines to implement Proposition 13‘s undefined ‗change in
ownership‘ provision.‖ (Pacific Southwest, supra, 1 Cal.4th at p. 161.) The Task Force‘s
report became the blue print for the legislation. (Id. at p. 162.)
With respect to the term ―change in ownership,‖ the Task Force ―sought to distill
the basic characteristics of a ‗change in ownership‘ and embody them in a single test
which could be applied evenhandedly to distinguish between ‗changes‘ and ‗non-
changes.‘ ‖ (Task Force Report, p. 38; Pacific Southwest Co., supra, 1 Cal.4th at p. 161.)
1
Pursuant to the Assessor‘s and State Board of Equalization‘s request, we take
judicial notice of both the Task Force Report and Implementation Report. (Evid. Code,
§§ 452, subd. (h), 459.)
4
The Task Force was also anxious the test be sufficiently consistent with ―normal
understanding of ‗change in ownership‘ to withstand legal attack.‖ (Task Force Report at
p. 38; Pacific Southwest, supra, 1 Cal.4th at p. 161.)
The Task Force concluded the essence of a change in ownership ―is a transfer
which has all three of the following characteristics: [¶] 1. It transfers a present interest in
real property; [¶] 2. It transfers the beneficial use of the property; and [¶] 3. The property
rights transferred are substantially equivalent in value to the fee interest.‖ (Task Force
Report, p. 38, emphasis omitted.) The Task Force envisioned this proposed definition
would ―control all transfers, both foreseen and unforeseen‖ and recommended ―the use of
statutory ‗examples‘ to elaborate on common transactions.‖ (Task Force Report at p. 40,
emphasis omitted.)
With respect to co-tenancies, the Task Force stated: ―Tenancies-in-common and
joint tenancies create undivided interests in land, with each co-tenant owning a
percentage (fractional) interest. Transfer of any fractional interest is a change of
ownership, but results in reappraisal ONLY of the percentage interest transferred.
[¶] Unfortunately, such treatment imposes a new administrative burden on assessors. It
requires them to keep separate accounting records and base year values for the fractional
interests which are created or transferred at different times. The Task Force saw no
means of avoiding the new burden altogether, but did its best to minimize the burden.
[¶] Under the Task Force recommendations separate accounting is not required for
‗family‘ joint tenancies, which are the great majority of joint tenancies in this state. Thus
the new burden on assessor‘s [sic] is limited only to co-tenancies which don‘t fit under
the ‗family‘ joint tenancy rule and are not interspousal co-tenancies. That group of co-
tenancies should not be numerous.‖ (Task Force Report at pp. 41–42.)
As to ―family‖ joint tenancies, the Task Force explained: ―Probably the vast
majority of joint tenancies in California (other than interspousal joint tenancies) are those
in which a parent places his property in joint tenancy with children. The special aspect of
a joint tenancy (as distinguished from tenancy-in-common) is that the surviving joint
tenant (or joint tenants) succeeds to the entire property by operation of law on the death
5
of the other joint tenant. For that reason joint tenancy is often used as a substitute for a
will. The same consideration which justifies excluding the making of a will from change
in ownership also supports exclusion of the creation of a joint tenancy where the
transferor (e.g., parent) is one of the joint tenants. The rights of the new joint tenants
(e.g., the children) to obtain the entire property outright are contingent upon their
surviving the transferor joint tenant. Creation of such joint tenancies is not a change in
ownership, but the entire property is reappraised when the joint tenancy terminates.
Again, fractional accounting and reappraisal by the assessor is avoided. [¶] The rule
recommended by the Task Force is general; it covers any joint tenancy created by a
person who, after the creation of the joint tenancy, is one of the joint tenants, whether or
not it is a parent-child joint tenancy. However, most such joint tenancies are created
within a family.‖ (Task Force Report at pp. 42–43.)
The Comprehensive Legislation (1979 c. 242 AB 1488)
The recommendations of the Task Force were originally incorporated into
Assembly Bill No. (AB) 156, which was vetoed by the Governor on June 9, 1979. In
response to the Governor‘s veto message, a new bill, AB 1488, made some changes, not
relevant here, but otherwise included the provisions of AB 156. (Assembly Revenue and
Taxation Committee Enrolled Bill Analysis of AB 1488, as amended June 28, 1979, p.
1.) The Governor approved the revised legislation on July 10, 1979.
The legislation enacted through AB 1488 dwarfed the initial stop-gap legislation
that had been enacted through SB 154. ―As the myriad of complexities involving
property transfer rapidly became apparent, the resulting text of the 1979 law grew and
grew, ultimately to nearly six times the size of the SB 154 law of 1978.‖
(Implementation Report at p. 18.)
The Legislature adopted the Task Force‘s proposed definition of ―change in
ownership‖ as section 60 of the Revenue and Taxation Code. (Rev. & Tax. Code, § 60.)2
―Because the Legislature, in enacting section 60, adopted its language verbatim after
2
All further statutory references are to the Revenue and Taxation Code unless
otherwise indicated.
6
reviewing the task force report, it is evident that the Legislature intended for section 60 to
contain the overarching definition of a ‗change in ownership‘ for reassessment purposes.‖
(Pacific Southwest, supra, 1 Cal.4th at p. 162.)
The Legislature adopted the Task Force‘s proposed ―statutory examples‖ as
section 61 (illustrative of transfers constituting a change in ownership) and section 62
(illustrative of transfers not constituting, or excluded from, a change in ownership).
(§§ 61–62; Task Force Report at pp. 49–54; see also Pacific Southwest, supra, 1 Cal.4th
at p. 162.)
With respect to joint tenancies, section 61, subdivision (d), provided that the
―creation, transfer or termination of any joint tenancy interest, except as provided in
subdivision (f) of Section 62 and in Section 63‖ did constitute a change in ownership.
(Stats. 1979, ch. 242, § 4, p. 510 (A.B. 1488); see Task Force Report at p. 49.) Section
62, subdivision (f), in turn, provided that the ―creation or transfer of a joint tenancy
interest if the transferor, after such creation or transfer, is one of the joint tenants‖ did not
constitute a change in ownership. (Stats. 1979, ch. 242, § 4 p. 510 (A.B. 1488); see Task
Force Report at p. 51.) Section 65 spelled out the extent to which joint tenancy interests
would be reassessed on termination. (Stats. 1979, ch. 242, § 4, p. 510 (A.B. 1488); see
Task Force Report at p. 54.)3
The Cleanup Legislation (Stats. 1979, c. 1161, AB 1019)
Almost as soon as AB 1488 was passed, it became apparent the legislation needed
to be massaged, and the Legislature did so through AB 1019.
Pertinent to this case, section 65 was amended to make clear no change in
ownership (and no reassessment) would occur when an ―original joint tenant‖ terminated
his or her interest if the interest was transferred to ―the remaining joint tenants or the
spouse of the original joint tenant.‖ (Sen. Republican Caucus, analysis of Assem. Bill
3
While the Task Force had recommended the entirety of a joint tenancy property
be reassessed on the termination of any joint tenancy interest, the Legislature, in section
65, provided for only partial reappraisal. (Stats. 1979, ch. 242, § 4, p. 510 (A.B. 1488);
see Task Force Report at p. 54.)
7
No. 1019 (1979–1980 Reg. Sess.) as amended Sept. 7, 1979, p. 2.)4 ―The bill . . . [¶] . . .
[¶] . . . revises joint tenancy provisions of AB 1488 to: [¶] [p]rovide that no reappraisal
occurs when an original joint tenant terminates his/her interest, if such interest vests in
the remaining joint tenants. Reappraisal occurs only upon the complete turnover of all
original owners, (‗original transferors‘), or if an interest is transferred to a new party, and
not to the remaining present joint tenants. (65(a) R & TC).‖ (Assemblyman Thomas M.
Hannigan, letter to Governor Edmund G. Brown, Jr., September 20, 1979, pp. 1–2.) Or,
as the State Board of Equalization explained: The revision of ―AB 1488 provides that
reappraisal occurs only upon the complete turnover of all the original owners or the
termination of the interest of the last remaining original transferor, and does not result in
a reappraisal if the property is transferred to the remaining joint tenants.‖ (State Bd. of
Equalization, letter to Governor Edmund G. Brown, Jr. re Assem. Bill No. 1019 (1979–
1980 Reg. Sess.) Sept. 20, 1979, p. 2, italics added.)
Collectively, Assembly Bill Nos. 1488 and 1019 worked a significant change in
the way joint tenancies were treated for purposes of reassessment. As the
Implementation Report explained: ―The 1979 legislation of AB 1488 and AB 1019
represents a complete turnaround in the treatment of joint tenancies and undivided
interests, from that of SB 154. For 1978–1979 [pursuant to SB 154], the creation of a
joint tenancy was the trigger for reappraisal, while any termination of a joint tenancy
interest was not a change in ownership. . . . [¶] However, the Task Force found the SB
154 treatment to be exactly backward. It reasoned that joint tenancy confers some rights
in both joint tenants while they are both alive, but the most meaningful of ownership
rights—complete fee title to the whole property—would occur on the termination of the
joint tenancy, such as the death of one of the joint tenants. That right, like rights under a
will or intervivos trust, is contingent upon survivorship. Thus, the first exclusion to the
general rule under present law [defining change in ownership] is for any creation or
4
In accordance with Evidence Code sections 452, subdivisions (a) and (c) and
459, we take judicial notice of the legislative history of the relevant statutes on our own
motion.
8
transfer of a joint tenancy interest where the transferor remains as one of the joint tenants
after the transaction (Section 62(f)). The termination of a joint tenancy interest, however,
is generally deemed a change in ownership, which is the reverse of the earlier policy.‖5
(Implementation Report at pp. 20–21.)
The Implementation Report also discussed the new concept of ―original
transferors,‖ pivotal to the new view that creation of a joint tenancy would not constitute
a change in ownership, but termination would. ―In determining whether a joint tenancy
transaction constitutes a change in ownership, and if so the extent to which the property
would be reappraised, AB 1488 introduced and AB 1019 refined the concept of an
‗original transferor‘. [¶] An ‗original transferor‘ is one or more persons who hold joint
tenancy interests in property immediately after a complete turnover of the previous
original owners occurs. . . . After the point in time at which the original ownership is
established, no subsequent joint tenants who are added to the current ownership (except
the spouses just mentioned) are treated as ‗original transferors‘ (Section 65(a)).‖
(Implementation Report at p. 21.) The Report then elaborated on various kinds of
transfers by and between joint tenants and the consequence in terms of reappraisal.
(Implementation Report at pp. 22–23.)
5
The report also explained: ―[T]here are two other major exceptions [to the
general rule] where a joint tenancy transaction is NOT a change in ownership: [¶]
(1) Any termination of an ‗original transferor‘s interest‘, IF that interest [is] transferred
(a) by operation of law, i.e., upon death, and (b) in whole or in part to the remaining
original transferor(s) (Section 65 (a)(1)). However, if the transfer is intervivos, or
wholly to a non-original transferor, or there are no remaining original transferors, then
the ENTIRE portion of the property held by that original transferor PRIOR to the creation
of the joint tenancy will be reappraised. [¶] (2) Any termination of the joint tenancy
interest of OTHER than an original transferor, IF the interest is transferred to an original
transferor or else to all remaining joint tenants (Section 65(a)(2)). If that interest goes in
whole or in part to a NEW party beyond the current joint tenants (including original
transferor(s)), then a change in ownership DOES occur, and a reappraisal will be made of
the proportional interest transferred, in accordance with the general rule.‖
(Implementation Report at pp. 21–22.)
9
―This rather complex treatment,‖ the Implementation Report explained, was
―designed to protect family joint tenancy interests, and those of original owners.‖
(Implementation Report at p. 22.)
Subsequent Legislative Refinement
In 1980, the Legislature continued to refine the change in ownership statutes by
enacting several bills, including SB 1260, which revamped section 65, pertaining to joint
tenancies. (Dept. of Finance, Enrolled Bill Rep. on Sen. Bill No. 1260 (1980 Reg. Sess.)
as amended Aug. 26, 1980, p. 2.) ―Sections 61, 62 and 65 with respect to joint tenancy
interests generally are re-written to consolidate and clarify such language in Section 65.‖
(Assem. Revenue and Taxation Com., Rep. on Sen. Bill No. 1260 (1980 Reg. Sess.) as
amended May 28, 1980, p. 1; accord, State Bd. of Equalization, letter to Governor
Edmund G. Brown, Jr., re. Sen. Bill No. 1260 (1980 Reg. Sess.) Sept. 17, 1980, p. 2
[section 65 was ―completely rewritten in SB 1260 to clarify the treatment of joint
tenancies‖].)
―Specifically, intervivos transfers among the ‗original transferors‘ do not trigger
reappraisal. . . . Further, it is clarified that the transfer of an interest by the last surviving
original transferor results in reappraisal of the entire property interest held by the original
transferors.‖ (Assem. Revenue and Taxation Com., Rep. on Sen. Bill No. 1260 (1980
Reg. Sess.) as amended May 28, 1980, p. 1.) The legislation also made clear ―the transfer
of an interest by the last surviving original transferor results in reappraisal of the entire
property interest held by the original transferors.‖ (Ibid.) ―Original transferors,‖
explained the Assembly Revenue and Taxation Committee Report, are ―persons who
transfer property into joint tenancy. So long as they are part of the chain of ownership
there will be no reappraisal. Once the original transferor‘s interests are transferred, the
entire property is reappraised. Thus, partial reappraisals are avoided during the term of
the joint tenancy. This scheme has some administrative advantages, and while there will
be fewer reappraisals in the short run, the total property will have a higher reappraisal
when the term of the original transferors is terminated.‖ (Douglas D. Bell, Executive
Secretary, letter to Governor Edmund G. Brown, Sept. 17, 1980, p. 3.)
10
In 1988, additional technical corrections were made to section 65 to clarify that ―a
termination of an interest in a joint tenancy is excluded from change in ownership only if
an original transferor is still among the joint tenant.‖ (Legis. Analyst, analysis of Sen.
Bill No. 569 (1987–1988 Reg. Sess.) as amended May 23, 1988, p. 2.)
State Board of Equalization Regulations
The State Board of Equalization is charged with promulgating rules and
regulations to ensure statewide uniformity in appraisal practices. (Gov. Code, § 15606.)
To this end, the Board has promulgated regulations (Cal. Code Regs., tit. 18, § 462.040)
and published annotations of its opinion letters6 on the reassessment and taxation of joint
tenancies. The Board‘s interpretation of the statutes it is charged with implementing is
generally entitled to significant deference. (Environmental Protection Information
Center v. California Dept. of Forestry & Fire Protection (2008) 44 Cal.4th 459, 490
[80 Cal.Rptr.3d 28, 187 P.3d 888]; Yamaha, supra, 19 Cal.4th at p. 7.)
Since the passage of Assembly Bill Nos. 1488 and 1019 in 1979, the Board has
consistently treated family joint tenancies in the manner discussed above—that is, that
the creation of a family joint tenancy does not result in a change in ownership, but
termination of such a joint tenancy does. The Board‘s implementing regulations require
such treatment of a family joint tenancy. (Cal. Code Regs., tit. 18, § 462.040, subd. (b).)
Likewise, in annotations of its opinion letters, the Board has consistently explained that
while the creation of a family joint tenancy does not constitute a change in ownership
triggering reappraisal, termination of such a tenancy does. (E.g., Property Tax
Annotations, Annotation 220.0295, Joint Tenancy (April 15, 1987); Property Tax
6
―For more than 40 years, the State Board of Equalization (Board) has made
available for publication as the Business Taxes Law Guide summaries of opinions by its
attorneys of the business tax effects of a wide range of transactions. Known as
‗annotations,‘ the summaries are prompted by actual requests for legal opinions by the
Board, its field auditors, and businesses subject to statutes within its jurisdiction. The
annotations are brief statements—often only a sentence or two—purporting to state
definitively the tax consequences of specific hypothetical business transactions.‖
(Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 4–5
[78 Cal.Rptr.2d 1, 960 P.2d 1031] (Yamaha).)
11
Annotations, Annotation 220.0298, Joint Tenancy (Sept. 11, 1985).) In fact, Annotation
220.0298 addresses a situation analogous to that here. Explaining that a mother‘s
creation of a joint tenancy with her son would not constitute a change in ownership, the
annotation states a subsequent change to holding title as tenants in common would effect
a change in ownership for purposes of reassessment. (Property Tax Annotations,
Annotation 220.0298, Joint Tenancy [―If the joint tenants later take title to the property as
tenants in common, there is a change in ownership of the 50 percent undivided interest in
the property acquired by the son.‖]7; see also Property Tax Annotations,
Annotation 220.0305, Joint Tenancy (Jan. 19, 1994) [husband‘s and wife‘s recording
document that their joint tenancy interests were held as community property resulted in
third joint tenant‘s interest becoming a tenancy in common, constituting a change in
ownership unless an exclusion, such as parent-child exclusion, applied]8; Robert W.
Lambert, Tax Counsel for State Bd. of Equalization, opinion letter, May 24, 1999
[discussing effect of spouse‘s death on a joint tenancy that included a child, and
subsequent deed from widower to himself as the beneficiary and a widower; the latter
terminated the joint tenancy between the surviving parent and child, resulting in a
tenancy in common, and constituted a change in ownership].)
The Board is also called upon to provide instructions to county assessors in
connection with the classification, assessment and taxation of property, and does so, in
part, by way of ―Letters to Assessors‖ (LTA‘s). (Gov. Code, § 15606, subds. (e)–(f).)
LTA No. 81/56, dated April 17, 1981, provided a ―Quick Reference Chart‖ as a tool to
7
Property Tax Annotations, Annotation 220.0298, Joint Tenancy summarizes the
Board‘s September 11, 1985, response to an inquiry about the consequences of mother
and son terminating their joint tenancy and becoming tenants in common. (Barbara G.
Elbrecht, Tax Counsel for the State Bd. of Equalization, letter dated Sept. 11, 1985.)
8
Property Tax Annotations, Annotation 220.0305, Joint Tenancy summarizes the
Board‘s January 19, 1994, response to an inquiry about the consequences of a parents‘
community property statement on a joint tenancy with their child. (Luma Serrano, State
Bd. of Equalization, mem. to Verne Walton, Division of Assessment Standards, Jan. 19,
1994.)
12
help local assessors identify changes in ownership.9 One example was a joint tenancy
that included an original transferor. Upon creation of the joint tenancy there would be no
change in ownership, but on change to a tenancy in common, there would be. (State Bd.
of Equalization Letters to County Assessors No. 81/56 (April 17, 1981).) This example
was repeated in LTA No. 83/39. (State Bd. of Equalization Letters to County Assessors
No. 83/39 (March 18, 1983.)
The Statutes Are Interrelated and Implement the Legislature’s Intent
Mikkelsen contends that under the general definition of change in ownership set
forth in section 60, no change in ownership occurred when he terminated his joint
tenancy and created a tenancy in common. He maintains there was no transfer of any
―present interest‖ in the property (including the beneficial use thereof), and asserts
section 60 is controlling and the other statutory provisions pertaining to change in
ownership are subordinate to it.
While Mikkelsen is correct that section 60 reflects the Task Force‘s effort to
articulate a general definition (Task Force Report at p. 38), and the Legislature adopted
the proposed language (see Pacific Southwest, supra, 1 Cal.4th at p. 162), the extensive
legislative history makes clear section 60 does not stand alone and the other statutes
pertaining to change in ownership further explicate what constitutes a change in
ownership. Sections 61 and 62, for example, set forth the myriad examples the Task
Force provided to more concretely define change in ownership. (Task Force Report at
pp. 49–54.) These two statutes, as we have discussed, along with section 65, specifically
address family joint tenancies. (§§ 61, subd. (d), 62, subd. (f), 65.) Moreover, given the
detailed discussion of these joint tenancies in the Task Force Report and the
Implementation Report (Task Force Report at pp. 41–43; Implementation Report, pp. 21–
23), as well as in the legislative history of the subsequent retooling of section 65 (e.g.,
Letter to Governor (Sept. 17, 1980), p.2), there can be no question the Legislature
9
Pursuant to Assessor‘s and State Board of Equalization‘s request, we take
judicial notice of the Board‘s LTA‘s pertaining to family joint tenancies. (Evid. Code,
§§ 452, subd. (h), 459.)
13
intended that the complement of these statutes, and not section 60, alone, defines when a
change in ownership occurs.
Accordingly, we do not agree with Mikkelsen‘s view that no transfer of a ―present
interest‖ for purposes of section 60 occurred on the termination of his joint tenancy and
creation of a tenancy in common. What the Task Force, and in turn the Legislature,
meant by that phrase is fleshed out in sections 61, 62 and 65. (Task Force Report at p. 40
[statutory examples set forth in sections 61 and 62 ―elaborate‖ on the meaning of change
in ownership, providing guidance as to ―common transactions‖].) Moreover, what the
Task Force was particularly concerned about in connection with ―present interests‖ was
protecting purely contingent or inchoate transfers from reassessment. (Task Force Report
at pp. 37–40.) Mikkelsen‘s termination of his family joint tenancy interest and creation
of a tenancy in common was not such an ephemeral transfer.
Change in method of holding title exception
Mikkelsen, the Assessment Appeals Board and the trial court also focused on
section 62, subdivision (a), which provides in pertinent part: ―Change in ownership shall
not include: [¶] (a)(1) Any transfer between coowners that results in a change in the
method of holding title to the real property transferred without changing the proportional
interests of the coowners in that real property, such as a partition of a tenancy in
common.‖ (§ 62, subd. (a)(1).) As Mikkelsen points out, the term ―coowners‖ can
embrace joint tenants, as well as tenants in common.
We also note section 61, which lists numerous transfers and transactions that do
constitute a ―change in ownership‖ begins with the caveat, ―[e]xcept as otherwise
provided in Section 62, change in ownership . . . includes, but is not limited to . . . .‖
(§ 61.) In addition, section 65, which pertains specifically to joint tenancies, commences
by stating: ―The creation, transfer, or termination of any joint tenancy is a change in
ownership except as provided in this section, Section 62, and Section 63. . . . (§ 65, subd.
(a).) Furthermore, neither the reference to section 62 in section 61, nor in section 65, is
limited to any particular subdivision of section 62.
14
We agree the statutes, even as refined by way of amendment, are not stellar
models of clarity. However, when the statutory scheme is read in its entirety, it is
apparent family joint tenancies are not embraced within the change in the method of
holding title exception set forth in section 62, subdivision (a)(1).
We look first at section 62, which lists numerous transfers and transactions that do
not constitute a change in ownership. In addition to the change in the method of holding
title exception set forth in subdivision (a)(1), the statute also specifically addresses joint
tenancies in subdivision (f). Consistent with the view that creation of a family joint
tenancy is akin to making a will and should be similarly treated, subdivision (f) specifies
no change in ownership occurs upon ―[t]he creation or transfer of a joint tenancy interest
if the transferor, after the creation or transfer, is one of the joint tenants as provided in
subdivision (b) of Section 65.‖ (§ 62, subd. (f).) As we have discussed, section 65,
subdivision (b), specifically governs family joint tenancies and defines the term ―original
transferor,‖ a term essential to and pertaining exclusively to family joint tenancies. Thus,
as to joint tenancies specifically, the only exception provided by section 62 from change
in ownership is the creation of a family joint tenancy or transfer of such interest.
Section 61, which lists numerous transfers and transactions that do constitute a
change in ownership (except ―as otherwise provided in Section 62‖), also specifically
addresses joint tenancies. Subdivision (e) provides that ―[t]he creation, transfer, or
termination of any joint tenancy interest‖ is a change in ownership ―except as provided in
subdivision (f) of Section 62, and in Section 63 and 65.‖ (§ 61, subd. (e).) Section 62,
subdivision (f), and section 65, as we have discussed, pertain to family joint tenancies.
(§§ 62, subd. (f), 65.) Section 63 excludes transfers between spouses. (§ 63.) Thus, as to
joint tenancies specifically, section 61 provides the creation, transfer or termination of a
joint tenancy does result in a change in ownership, except as to family joint tenancies as
provided for in other statutes.
Section 61 also specifically addresses tenancies in common. Subdivision (f)
specifies ―[t]he creation, transfer, or termination of any tenancy-in-common interest‖ is a
change in ownership ―except as provided in subdivision (a) of Section 62, and in
15
Section 63.‖ (§ 61, subd. (f).) As noted, section 63 excludes transfers between spouses,
and section 62, subdivision (a), of course, is the provision Mikkelsen contends applies to
the termination of his joint tenancy.
A comparison of subdivisions (e) and (f) of section 61 demonstrates the
Legislature intended that subdivision (a) of section 62 apply to tenancies in common, but
not to family joint tenancies. Subdivisions (e) and (f) of section 61 make highly specific
references to other statutes—subdivision (e) of section 61, pertaining to joint tenancies,
refers to subdivision (f) of section 62, whereas subdivision (f) of section 61, pertaining to
tenancies in common, refers to subdivision (a) of section 62. Had the Legislature
intended that section 62, subdivision (a), apply to family joint tenancies, it would have
referenced section 62, subdivision (a), in both subdivision (e) and (f) of section 61. It did
not, and referenced section 62, subdivision (a), only in connection with tenancies in
common. (§ 61, subd. (f).) Moreover, it referenced a different subdivision of section 62,
subdivision (f), in connection with joint tenancies. (§ 61, subd. (e).)
Thus, while we agree the term ―coowners‖ in section 62, subdivision (a)(1), is
sufficiently broad to include family joint tenancies, the other statutes which comprise the
statutory scheme defining change in ownership and of which it is a part, demonstrate the
term does not include such joint tenancies. Rather, the statutory provisions specifically
applicable to family joint tenancies are section 61, subdivision (e), section 62,
subdivision (f), and section 65, subdivisions (b) through (e). (§§ 61, subd. (e), 62, subd.
(f), 65, subds. (b)–(e).)
The legislatively commissioned reports giving rise to these statutes also reflect this
view of the applicability of the change in method of holding title exception set forth in
section 62, subdivision (a)(1). The Task Force Report made little mention of tenancies in
common or the change in method of holding title exception set forth in section 62,
subdivision (a)(1). Rather, it focused on the treatment of joint tenancies, and in particular
family joint tenancies. It made no suggestion section 62, subdivision (a)(1), applied to
family joint tenancies. (Task Force Report at pp. 41–42.)
16
The Implementation Report separately discussed joint tenancies and tenancies in
common. (Implementation Report, pp. 20–23.) With respect to joint tenancies, the report
identified ―three major exceptions‖ to the general rule (set forth in section 61, subdivision
(e), and section 65, subdivision (a)) that creation, transfer or termination of a joint
tenancy interest does constitute a change in ownership, triggering a reappraisal of the
interest. (Implementation Report at p. 20.) These three exceptions are: (1) the creation
or transfer of a joint tenancy interest where the ―original transferor‖ remains a one of the
joint tenants; (2) the termination of an ―original transferor‘s‖ interest as a result of death
and the transfer is to a remaining ―original transferor‖; and (3) the termination of a non-
original transferor‘s interest, if the transfer is back to the original transferor.
(Implementation Report at pp. 21–22.) These are the only exceptions to the general rule
identified for family joint tenancies—no mention is made of an additional exception
under section 62, subdivision (a)(1). In contrast, with respect to tenancies in common,
the Implementation Report expressly referenced the change in method of holding title
exception set forth in section 62, subdivision (a)(1), explaining that where there is a
change in the method of holding title, ―such as a partition of a tenancy-in-common,‖ the
tenancy in common interest ―is NOT reappraised.‖ (Implementation Report at p. 23.)
As we have discussed, the Board of Equalization has also consistently taken the
position change in ownership with respect to family joint tenancies is governed
exclusively by the statutes specifically pertaining to such joint tenancies, namely,
section 61, subdivision (e), section 62, subdivision (f), and section 65, subdivisions (b)
through (e). (E.g., State Bd. of Equalization Letters to County Assessors No. 80/180
(Dec. 9, 1980), pp. 1–4 [discussing revisions to sections 62 and 65 made in 1980 by
SB 1260 and AB 2777].)
We therefore conclude the change in the method of holding title exception set
forth in section 62, subdivision (a)(1), does not apply to the termination of family joint
tenancy at issue here.
IV. DISPOSITION
The judgment is reversed. Parties are to bear their own costs on appeal.
17
_________________________
Banke, J.
We concur:
_________________________
Margulies, Acting P. J.
_________________________
Dondero, J.
A134340, Benson v. Marin Co. Assessment Appeals Bd.
18
Trial Judge: Honorable Faye D‘Opal
Trial Court: Marin County Superior Court
Jack F. Govi and Sheila Lichtblau for Plaintiff and Appellant.
Frank I. Mulberg and Brett D. Mulberg for Real Party in Interest.
Kamala D. Harris, Attorney General and Joyce E. Hee, Supervising Deputy Attorney
General for the California State Board of Equalization as Amicus Curiae on behalf of
Defendant.
19