Effective January 1, 2006, a new disclosure, on a specified form, will be required in California sales of residential real estate. Happily, this disclosure requirement is easy to comply with and it makes sense.

The new law is a result of Assembly Bill 459 (Oropeza), which was approved by the Governor September 29. It requires that buyers be made aware of the fact that they are likely to receive a supplemental tax bill after the close of escrow.

In support of the bill, the author's office stated that "first-time home buyers frequently do not know what a supplemental tax bill is, or whether the obligation to pay the bill falls on the buyer or the lender." Of course, it might be noted, misunderstandings in this area are not the exclusive province of first-time homebuyers. There are plenty of old timers who can be confused about these matters as well.

The supporting argument goes on to point out that the property tax bill (i.e. the amount owed) can change when the property changes ownership and the assessor reassesses the value. "The difference between the old assessed value of the home and the new ends up in the supplemental tax bill. This bill comes several months after the homeowner has taken possession of the home and is separate from the annual property tax bill."

The bill's author notes two potential problems. One is that buyers who are having their taxes impounded by the lender may assume that the lender will be paying this bill. The other is simply that the buyer may not have known to set aside sufficient funds to pay the bill.

Imagine the following scenario: You purchase a house for $600,000 and close escrow on January 1. The tax rate in the area is 1.1 percent of assessed value, and the assessed value of the property at the time you bought it was $300,000. At the time of purchase, then, the property tax bill was $3,300. Knowing about California and Proposition 13, you know that your new assessed value will be based on your purchase price, and that your tax bill henceforth will be twice as high -- $6,600 – subject to limited inflationary adjustments.

But you have purchased right in the middle of the tax year. The first half, for the period July 1 to December 31, has already been paid on the basis of $3,300 per year. What about the second half, i.e. the period between now and June 30? Are you still taxed at the "old" rate, until your $6,600 bill kicks in at the beginning of the next tax year? Of course not! If your government is efficient about anything, surely it is so about collecting taxes. It is not going to let you skate for half a year at the amount based on the old assessment. Rather, it will send a supplemental bill to cover the difference between the current tax bill and a half year based on the new amount of $6,600 per year.

Not everyone knows this. Hence the new disclosure.

The disclosure form, "Notice of Your 'Supplemental' Property Tax Bill" tells the home buyer three things:

• The property will be reassessed at the time of change of ownership, and this may result in a supplemental bill being sent.

• The bill will not be sent to the lender.

• Even if the buyer's tax payments are impounded, the bill will not be paid by the lender. It is the buyer's responsibility to pay the supplemental bill directly to the Tax Collector.

The disclosure does not tell the buyer how to compute what the amount of the supplemental bill will be. Hopefully, it will lead one to think about it, and to find out if money is likely to be an issue.

As noted, the language and the format of the disclosure is statutory. The California Association of Realtors (CAR) has already produced a version for its members to use.