Cal-American Income Property Fund II v. County of Los Angeles

I

Statement of the Case

Cal-American Income Property Fund II appeals from a decision by the superior court denying its request for a refund of property taxes. The issue raised is whether there was a change of ownership in the real property, within the meaning of Proposition 13, so as to permit a reassessment of its value and the attendant increase in property taxes.

II

Factual Background

The subject realty is a 137-unit apartment building which Cal-American, a limited partnership, purchased in 1974.

In May 1980, Cal-American agreed to sell the property to Convair Properties Corporation, conveying title in fee simple. The sales price was $7 million with Convair giving a down payment of $750,000. The remainder of the purchase price was covered in an all-inclusive trust deed carried by Cal-American which included the debts it owed on the existing first and second trust deeds.

The promissory note provided that from the close of escrow (July 18, 1980) until April 1, 1981, interest only would be paid monthly “. . . in an amount equal to the lesser of seven percent (7%) per annum of the unpaid principal or the ‘net spendable cash’ generated from the Property . . . .” Net…