Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

AGO 1951 No. 88 -
Attorney General Smith Troy


The real estate sales tax is applicable to the sale by a county of tax-title lands, and is the obligation of the county, as the seller.  The tax should be deducted from the proceeds of the sale prior to the distribution of such proceeds to the various taxing districts entitled thereto.

                                                                  - - - - - - - - - - - - -

                                                                    July 12, 1951

Honorable Arthur H. Reed
Acting Prosecuting Attorney
Cowlitz County
Kelso, Washington                                                                                                                Cite as:  AGO 51-53 No. 88

Dear Sir:

            You have requested our opinion on the following question:

            1. Does the real estate sales tax imposed by the county apply to the sale by the county of tax-title lands?

            2. If so, is the county, as the seller, liable for payment of the tax?

            3. If so, should such tax be added to the bid price at the time of sale?

            Our conclusions may be summarized as follows:

            The real estate sales tax is applicable to the sale by a county of tax-title lands, and is the obligation of the county, as the seller.  The tax should be deducted from the proceeds of the sale prior to the distribution of such proceeds to the various taxing districts entitled thereto.


             [[Orig. Op. Page 2]]

            The real estate sales tax is imposed by ordinance in most of the counties pursuant to authority granted by chapter 11, Laws of 1951, Ex. Sess. Section II of the model ordinance enacted in the various counties imposes the tax, following the terms of the statute, "on each sale of any real property" situated in the county.  The term "sale" is so broadly defined in both the statute and the ordinance that it includes sales of tax-title land.  Sales by counties are not exempted.  It follows that the sale by a county of tax-title lands is subject to the tax.

            The tax is made the "obligation of the seller" both in the statute and by ordinance, and the county, as a seller, is not exempted.  Therefore, the county is liable for payment of the tax.

            Your real question is how the county is to obtain the money to pay this tax.  This probably is a result of some misunderstanding as to the nature of the proceeds received by the county upon the sale of tax-title lands.  Title to these lands may be taken by the county at a foreclosure proceeding (section 129, chapter 130, Laws of 1925, Ex. Sess.; Rem. Rev. Stat. 11290), and the county then holds the same as trustee for the taxing districts entitled to a share of the delinquent taxes thereon.  State ex rel. King County Water District v. Stacy, 10 Wn. (2d) 248, 254-5, 116 P. (2d) 356, collecting cases on this point.  All taxes are thereby cancelled, and no further taxes may be levied, the property being stricken from the tax rolls.  Sections 131 and 132, chapter 130, Laws of 1925, Ex. Sess. (Rem. Rev. Stat. 11292 and 11293);Wolff v. Commercial Waterway District, 14 Wn. (2d) 45, 48-49, 127 P. (2d) 262.

            The county sells this tax-title land under the provisions of section 133, chapter 130, Laws of 1925, Ex. Sess., as last amended by section 1, chapter 172, Laws of 1945 (section 11294, Rem. Supp. 1945), and no other taxing district may participate.  Commercial Waterway District v. King County, 197 Wash. 441, 451-2, 85 P. (2d) 1067.  The proceeds of the sale of such land

            "* * * shall be justly apportioned to the various funds existing at the date of the sale, in the territory in which such property is located, according to the tax levies of the year last in process of collection."  Rem. Rev. Stat. 11293,supra.

            Each district gets merely its pro rata share of the proceeds.  Wolff v. Commercial Waterway District, supra, at page 48.  Under this procedure, as distinguished from the case where another person buys at the foreclosure  [[Orig. Op. Page 3]] sale, the record owner is not entitled to any moneys which may be obtained in excess of the taxes which were due at the time of foreclosure.  All taxes have been cancelled by the county's acquisition, and there can be no surplus or deficit.  King County v. Odman, 8 Wn. (2d) 32, 37-8, 111 P. (2d) 228; State ex rel. Seattle v. King County, 4 Wn. (2d) 589, 597, 104 P. (2d) 575.  The property is not required to be sold for a price sufficient to pay delinquent taxes.  It may be sold for more or for less.  The board of county commissioners makes this determination.  Rem. Rev. Stat. 11294,supra.  As a practical matter, and by custom in most counties, the minimum price at which a sale is allowed is the amount of delinquent taxes for which the foreclosure was made, and often the amount of any local improvement assessment is included.

            While we have found no statutory provision permitting a county to deduct its expenses from the purchase price before distributing the proceeds, we think that such power must exist.  We think that under the circumstances where the county, as trustee for all interested taxing districts, selects the time, parcels to be sold, minimum sale prices, and other conditions for making the sale, conducts the same, and is required only to "do its best" to realize funds for the various taxing districts in replacement of the lost taxes, it is also entitled to deduct a tax on such sale from the proceeds prior to making distribution.  Surely it would be inequitable for the county to be forced to bear such expense out of its own funds.  This circumstance has forced many counties to adopt an extraordinary procedure at tax-title sales of informing bidders that their bid is to be increased by the amount of the tax.  In our opinion this procedure is unnecessary.

            It is our opinion that the real estate sales tax upon the sale by a county of tax-title lands may be deducted from the selling price and paid by the county prior to the distribution of the remainder of the proceeds.  Inasmuch as the board of county commissioners follows the practice of setting a minimum acceptable bid price sufficient to realize taxes and assessments which had been outstanding against the property, we presume that the boards will henceforth include the amount of this tax in such computation.

Very truly yours,

Attorney General

Assistant Attorney General