Supervisors quash sale of city-owned property

VISALIA — The Tulare County Board of Supervisors on Tuesday voted to rescind the sale of a piece of property owned by the city of Porterville that it mistakenly sold during an online auction in March.

The board voted unanimously to determine that the small parcel should not have been sold and, though the deed had since reportedly changed hands twice, that there was no bona fide purchaser of the property. “Bona fide purchaser” is a legal term that refers to an innocent party who purchases property without notice of any other party’s claim to the property’s title.

The matter was up for discussion during a lengthy public hearing.

All of the parties involved in the mix-up, including the county’s tax collector, the two “owners” of the deed, city officials and Porterville City Council member Greg Shelton, spoke prior to the board’s vote.

Rita Woodard, the county’s tax collector, said the city bought the property in April of 2005 from Jackie Cotton and that in July of the same year the city wrote to the county assessor, requesting that the property be made tax exempt. Due to a backlog in the assessor’s office, the necessary remapping for the change in ownership was delayed and never reported by the assessor to her office. In turn, Cotton continued to receive tax bills, and the taxes on the property were not paid through 2010. In researching the parcels subject to tax sale in 2012, Woodard’s office was informed that the land had been sold to the city in 2005.

A staff report in Tuesday’s board agenda states that Woodard’s office didn’t connect the lack of payment of taxes on the property to its purchase by a tax-exempt entity but did notify the city, as a party of interest, that the property would be sold for unpaid taxes at an auction of tax-defaulted property in March.

The county sold the parcel at that auction to Shelton, who requested the deed be issued with the purchaser listed as Donald Beardsley.

Woodard said that Beardsley contacted her office on Dec. 13 and said he had sold the parcel on June 7 to Steve Penn, though there was no deed attached to the sale agreement and no deed had been recorded.

“The bottom line is we made a mistake. We don’t like to make mistakes and we would like to fix it,” Woodard told the board.

Porterville City Manager John Lollis said the parcel is part of the city’s Heritage Center complex, located on Orange Avenue, and that there are plans to further develop the sports field there with the help of grant money. He later said the property would serve as the location of a storage facility.

Penn also spoke during the hearing, and said he felt he was the victim of “this purported deal.”

“I am glad the assessor has admitted that there was a mistake, and I am good with that.

This little piece of property is not a gold mine and we’d like to get it over with, also,” he said.

“The idea is, though, that my honesty and integrity comes into value here, where it says that I was not a bona fide purchaser because I have a contract of sale.”

Penn acknowledged that the contract was never notarized nor recorded, and said it wasn’t necessary because such contracts are legally binding.  

He also told supervisors that under case law, the county was required to “contract equitably with the purchaser” and asked supervisors what the remedy was going to be since he was now out $10,000.

Porterville City Attorney Julia Lew said the board could rescind a tax deed under two conditions: if the property shouldn’t have been sold and if it was not transferred to a bona fide purchaser for value.

“We believe both those conditions have been met. ... We believe that a conditional sales document, particularly the one that’s before the county, does not serve to make this a bona fide purchaser situation,” she said. “It was not recorded and there was reported information otherwise.”

Beardsley, who said he found the situation very unusual and that he was sorry he was even at the meeting, said he purchased the property via the online account of his next-door neighbor, who also happens to be Shelton.

“I don’t really mess too much with computers. I’m really slow, especially with typing and everything else,” he said.

Beardlsey said he and Shelton were browsing through a number of properties and this one caught his eye because it was in the vicinity of the new courthouse.

“It’s a small piece you can’t do much [with]. I thought that it would be a good place for a coffee stand,” he said, adding that he and Shelton own a couple of pieces of property together.

Shelton said he originally had no intention to speak during the hearing.

“You have many people claiming mea culpa and mistakes happen. I understand that,” he said. “But Mr. Beardsley is going to have to come up with some money. ... I don’t know what Mr. Penn is going to do. I don’t know if he’s going to sue Mr. Beardlsey for selling the piece of property.”

Shelton said that at the very least, Beardsley would have to come up with $3,000 to “get even.”

“I think the equitable thing to do here is to delay this and ask for maybe a settlement for Mr. Beardsley and Mr. Penn. What I don’t like is words like ‘purportedly.’ I have contracts of sale. ... I just did one a month and a half ago.”

Supervisor Allen Ishida said as someone who purchases tax-defaulted property as part of his business, Shelton should be aware that due diligence research is expected from the bidder.

“That would mean going to the records to make sure who the owner is, and, apparently, that wasn’t done here,” Ishida said.

After briefly deliberating behind closed doors, the board agreed that it was on the purchaser to be aware that the property was owned by the city, because they have the ability to find that out through due diligence.  

It was not clear as to how the original purchaser of the property will be reimbursed or how much they will be reimbursed.

Contact Denise Madrid at 784-5000, Ext. 1047. Follow her on Twitter @DeniseMadrid_.