The out of area escrow company then collects the transfer tax for both the city tax and the county tax. They then send the entire amount to the county with transfer tax yped in a lump sum on the deed.
The clerk at the assessors office calculates the incorrect sale price by multiplying the lump sum of the transfer tax by a number that would give the correct sale price if it were used on the county portion of the tranfer tax alone.
This commonly results in a recorded price that is appoximately 350% of the actual price.
Not only does the owner have the problem that the recorded price is wrong. They also have the problem of an over assesment that Elizabeth mentioned. The county will demand a full payment of the incorrect tax amount, promising the owner a refund, if and when the problem is eventually corrected. failure to pay the full amount by Friday April 10th will result in penalties and interest. 3rd the city did not get their fee because the county did not split it out for them. The city will then bill the poor owner for "unpaid" transfer tax plus penalties and interest. (Based on 350% of the actual sale price)
If the escrow company does not fix this for the new owner, they should be reported to the insurance commissioner. The insurance commissioner is the California state agency that regulates title companies.
There are so many out of area escrow companies that are making these original errors, you can be assured the exact same foul up is occurring repeatedly. The county could institute a policy to flag deeds and transfer tax payments that come in that are for properties within the city boundaries but containing only one transfer tax. Thus they could catch the problem early, saving citizens and county personell many hours of research and communication loops.
However, county goverment management has chosen to allow the errors to compound for the following reasons:
1. As they are not the ones making the original error, they have deniability. As in " Hey, this wasn't our mistake, it was your escrow company that provided us with this information."
2. The error gives them inflated numbers to work with (at the city's temporary and the taxpaying homeowners long term expense) at least until the situation is sorted out. If it takes a while to sort they can also earn undeserved penalties and interest if the blindsided homeowner doesn't happen to have 350% of the expected property taxes set aside.
3. Inertia. As I said, the error is not original with them, so their deniability is genuine. The fault really does lie originally with incompetent out of area escrow companies.
I encourage that anyone who does not recieve prompt resolution of this problem from their escrow company send a complaint form off to the California Insurance Commissioner. I have put the web site link below.