Could a Washington county discount unpaid property taxes to help a city sell land acquired through assessment foreclosure?

Plain-English summary

A Washington city could acquire land by foreclosing a delinquent local-improvement assessment and then hold it in trust for the improvement district's bondholders and creditors. In 1987, Benton County's prosecutor asked whether the county could accept less than the unpaid county taxes, interest, and penalties so the city could sell such land and return it to the tax rolls. The Attorney General said no for a sale under RCW 35.53.030.

The city could set its sale price under that statute, but proceeds belonged to the local-improvement funds and could not be divided with the county to satisfy both liens. The purchaser would still have to satisfy the county's outstanding claim in full. The opinion's footnotes identified distinct possibilities: before sale, the city could pay county taxes without penalties or interest under RCW 35.49.140; the city could also set a lower sale price to account for what the purchaser later owed the county. Neither possibility authorized the county itself to take less from the purchaser. The AG expressly limited the answer to a city sale and did not decide county authority in other settings.

“In the context of a sale of property under this provision, there is no authority for the county to receive any less than the full amount of taxes, interest, and penalties from the purchaser of the property.” (Official opinion)

Currency note

This opinion was issued in 1987. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Could a county forgive part of the taxes to make the city's sale easier?
A: The AG said no for the city trust-property sale described in RCW 35.53.030. It found no authority for the county to accept less than the full amount owed by the purchaser.

Q: Could the city reduce the sale price instead?
A: The opinion said the city council could set a price that accounted for the buyer's later county-tax payment. That affected the city's proceeds, not the county's claim.

Q: Did the opinion rule on every possible county tax settlement?
A: No. It expressly confined its answer to the pending sale by the city.

Background and statutory framework

The city held property in trust after foreclosing a local-improvement assessment lien. RCW 35.53.030 governed its later sale and assigned the proceeds to local-improvement funds. Outstanding county taxes remained an issue even though the property was exempt from current general taxation while held in trust.

Citations and references

The opinion discussed RCW 35.53.030, RCW 35.53.010, RCW 35.49.140, and State ex rel. King Cy. Water Dist. v. Stacy, 10 Wn.2d 248, 116 P.2d 356 (1941).

Source

• Landing page: https://www.atg.wa.gov/ago-opinions/ability-county-agree-receive-less-due-and-owing

Original opinion text

Attorney General Ken Eikenberry

PROPERTY ‑- TAXATION ‑- SALE BY CITY ‑- ABILITY OF COUNTY TO AGREE TO RECEIVE LESS THAN DUE AND OWING

To facilitate a sale by a city under RCW 35.53.030 of property held in trust by the city, a county may not agree to receive less than the full amount of taxes, interest, and penalties owed to it on such property in order to place the property back on the tax rolls

December 14, 1987

Honorable Andrew K. Miller
Benton County Prosecuting Attorney
Benton County Justice Center
7320 West Quinault
Kennewick, Washington 99336

Cite as: AGO 1987 No. 27

Dear Sir:

By letter previously acknowledged, you have requested the opinion of this office on the following question:

To facilitate a sale by a city under RCW 35.53.030 of property held in trust by the city, may a county agree to receive less than the full amount of taxes, interest, and penalties owed to it on such property in order to place the property back on the tax rolls?

We answer your question in the negative for the reasons set forth in our analysis.

ANALYSIS

Taxes and assessments may be owed on property to both a county and a city. If the city forecloses on its assessment lien, bids in the property at the foreclosure sale, and puts the property up for sale, the property is still subject to the county's outstanding [[Orig. Op. Page 2] ] taxes. Your question arises in the context of the pending sale by the city. We answer that question and do not address the issue of the county's authority outside the context of the city's sale.1/

Property may be acquired by a city at the city's own foreclosure sale following foreclosure of delinquent local improvement assessments pursuant to chapter 35.50 RCW. Under these circumstances, the city holds title to the property in trust for the benefit of the bondholders and other creditors of the local improvement district for the purpose of realizing funds on lease or resale of such property pursuant to RCW 35.53.030. State ex rel. King Cy. Water Dist. v. Stacy, 10 Wn.2d 248, 116 P.2d 356 (1941); RCW 35.53.010. While it is held in trust by the city, the property is "exempt from taxation for general state, county and municipal purposes . . . ." RCW 35.53.010. This tax exempt status may prompt a county to seek to facilitate a sale by the city of the trust property to place the property back on the county tax rolls.

RCW 35.53.030 governs the lease or sale of property held in trust by the city. It provides:

A city or town may lease or sell and convey any such property held in trust by it, by virtue of the conveyance thereof to it by a local improvement assessment deed. The sale may be public or private and for such price and upon such terms as may be determined by resolution of the council, any provisions of law, charter, or ordinance to the contrary notwithstanding. After first reimbursing any funds which may have advanced moneys on account of any lot, tract, or parcel, all proceeds resulting from lease or sale thereof shall ratably belong and be paid into the funds of the local improvement concerned.

The clear and unambiguous language of this statute indicates that the city may sell such property for less than the full amount of [[Orig. Op. Page 3] ] taxes, interest, and penalties in accordance with a resolution of the city council.2/

See AGO 1959-1960 No. 130; AGO 1931-1932 p. 252. The statute also provides, however, that all proceeds from the city's sale belong to the funds of the local improvement concerned. RCW 35.53.030. Therefore, while the proceeds from the city's sale can be less than the full amount owed the city, such proceeds cannot be divided between the city and the county to satisfy the liens of both entities.

RCW 35.53.030 does not provide for a means of satisfying the county's outstanding taxes. In the context of a sale of property under this provision, there is no authority for the county to receive any less than the full amount of taxes, interest, and penalties from the purchaser of the property. We, therefore, answer your question in the negative.

Very truly yours,
KENNETH O. EIKENBERRY
Attorney General

TERESE NEU RICHMOND
Assistant Attorney General

*** FOOTNOTES ***

1/Prior to the sale the city may satisfy the county's outstanding taxes without payment of penalties or interest. RCW 35.49.140. Subsequent to the city's sale the county may foreclose on the property and sell it subject to the requirements of RCW 84.64.080 or accept payment of the outstanding county taxes, penalties, and interest.

2/The city council could set the price for the city's sale to accommodate the payment that would have to be made later by the purchaser to the county to satisfy the outstanding county taxes. This scenario does not allow the county to receive less than the full amount of taxes, costs, interest, and penalties, but only allows the city to receive less than it might otherwise receive in order to attract a purchaser.