Secured & Unsecured Taxes
Property taxes are based on the assessed value of real property, such as land, structures and vines, and on the assessed value of personal property, such as business equipment, boats, aircraft and possessory interests. There are two types of property taxes, secured and unsecured. To explain the difference between secured and unsecured taxes one has to understand the concept of property taxes being a lien on the property. The word "lien" relates back to the Latin verb ligare, meaning "to tie or bind." Thus placing a lien against someone or their property is a way of "binding" that property to show an obligation owed by that owner to the person who holds the lien. The nature of the lien distinguishes secured and unsecured property taxes.
When taxes become a lien against real property that consists of land, buildings, vines, etc., the lien is considered to be secured because the property cannot be moved to avoid the payment of taxes. The collection method for secured taxes relies on the ability to sell the real property through a tax auction if the taxes are unpaid for a period of five years. If the owner of the real property owns personal property associated with that real property in the same name, such as winery equipment located in a building on the property, the taxes on that personal property can also be secured.
One Bill, Two Installments
Secured tax bills for the tax year that runs from July 1 to June 30 are payable in two installments, due November 1 and February 1 and go delinquent on December 10 and April 10 each year. An example would be a husband and wife who own real property and the winery and equipment in that winery on that parcel. All of that property could be secured.
The Revenue and Taxation Code defines unsecured property as property-the taxes on which are not a lien on real property sufficient, in the opinion of the assessor, to secure payment of the taxes. In plain English this means that the property is portable and therefore may not be capable of being sold to pay the taxes or is not owned by the same person as the owner of the real property on which it is located. Thus a boat, airplane or possessory interest is unsecured. An example of unsecured business property is a husband and wife own the real property on which a winery is located but the winery equipment is owned by a separate corporation that leases the winery from the couple. The taxes on the winery building would be secured, but the taxes on the equipment would be unsecured.
One Bill, One Installment
Taxes on unsecured property located in Napa County on January 1 (the lien date) are payable in one installment for the tax year beginning July 1 and ending the next June 30. The bill is issued in mid-July, is due when issued and becomes delinquent on August 31 of that year. The Tax Collector usually collects unpaid, unsecured taxes by placing a lien against the owner of the property. The lien is recorded with the County Recorder and shows up on the unsecured property owner's credit report. The lien is removed once the taxes are paid.