Brown

This is a case about documentary transfer taxes and the manner in which they are to be calculated when a purchaser at a trustee’s sale is neither a beneficiary nor a mortgagee of the foreclosed deed of trust. We hold that, under those circumstances, the tax must be based upon the purchase price, without regard to the amount of indebtedness attached to the property and assumed by the purchaser.

Facts

In 1994, Minnie Brown purchased real property at a trustee’s sale for $255,859.42, subject to an unpaid debt of $480,691.18. When Brown (who was not a beneficiary of the foreclosed trust deed or otherwise affiliated with the property) presented the trustee’s deed to the Registrar-Recorder of Los Angeles County for recording, the County assessed documentary transfer taxes of $529.10 ($1.10 per thousand dollars on the $480,691.18 unpaid debt), and the City of Los Angeles assessed documentary transfer taxes of $2,164.50 ($4.50 per thousand dollars on the $480,691.18).

In Brown’s view, the documentary transfer taxes should have been based on the price she paid to purchase the property, not on the amount of the unpaid debt (in which event she would have owed the County only…