San Francisco: Wealthy Residents Sue City, Buyers After Their Tax-Delinquent Street Sold

The wealthy residents of San Francisco's exclusive, gated Presidio Terrace haven't paid a $14/year tax bill for three decades. This led the city to auction off the tony street that boasts among its former residents House minority leader Nancy Pelosi (D-CA) and Senator Diane Feinstein (D-CA). The auction was an attempt to recoup its delinquent tax losses valued at less than a thousands dollars (including penalties, interest, etc.).

Officials hit the jackpot when a young couple purchased the street at auction two years ago for $90,100. The new owners are reportedly toying with the idea of charging residents and even outsiders (gasp!) to pay to park on their shiny new street.

Now the current residents of the street are outraged and have filed formal complaints and even a lawsuit in an attempt to rescind the sale.

Tina Lam and Michael Cheng snatched up Presidio Terrace -- the block-long, private oval street lined by 35 megamillion-dollar mansions -- for $90,000 and change in a city-run auction stemming from an unpaid tax bill. They outlasted several other bidders.
Now they're looking to cash in -- maybe by charging the residents of those mansions to park on their own private street.
Those residents value their privacy -- and their exclusivity. Past homeowners have included Sen. Dianne Feinstein and her financier husband, Richard Blum; House Democratic leader Nancy Pelosi; and the late Mayor Joseph Alioto. A guard is stationed round the clock at the stone-gate entrance to the street to keep the curious away.
So imagine the residents' surprise when San Jose residents Cheng and Lam wound up with the street, its sidewalks and every other bit of "common ground" in the private development that has been managed by the homeowners since at least 1905. That includes a string of well-coiffed garden islands, palm trees and other greenery that enhance the gated and guarded community at the end of Washington Street, just off Arguello Boulevard and down the hill from the Presidio.
"We just got lucky,"said Cheng, a real estate investor.
. . . . The couple's purchase appears to be the culmination of a comedy of errors involving a $14-a-year property tax bill that the homeowners association failed to pay for three decades. It's something that the owners of all 181 private streets in San Francisco are obliged to do.
Two years ago, the city's tax office put the property up for sale in an online auction, seeking to recover $994 in unpaid back taxes, penalties and interest. Cheng and Lam, trawling for real estate opportunities in the city, pounced on the offer -- snatching up the parcel with a $90,100 bid, sight unseen.

The homeowners apparently only found out about the sale earlier this year, and they are moving to retake their street.

Curbed San Francisco continues, reporting on the couple's stated plans for the street:

“The Association has not paid those taxes because the City has been sending the property tax bills to the Association at the following address: 47 Kearny Street. [...] Which is not the address of the association or any member.

If San Fransicko failed to provide procedural due process in failing to submit bills to the owners or, particularly, failed to give them notice of the sale, the owners could very well be successful in overturning the sale.
Of course this is the law in a `flyover’ state (notice and an opportunity to be heard) and the 48 others. CA’s mileage may vary.
If CA decides to adhere to US Constitutional procedural due process the buyers will probably get back their purchase price, interest and perhaps ten per cent on top.

“The couple should put up a gate and close the street until they drop the suit.”

I’m just wondering if the Chinese couple don’t also own the guard house, since it sits in the middle of the street they now own. Here’s the deal, evict the current guard and put in one of their own, one that charges a fee ( kinda like Pebble Beach does) for allowing the residents to access their homes.
Also note in the photo, these folks have one of the biggest Synagogues in town right next door. Wonder if they’re included?

Not really. It is the responsibility of the HOA to make sure that the City has the right information not Vice versa. The HOA should have noticed that they had not paid any taxes for decades. The HOA has been in existence since 1905. Apparently they paid their taxes for the first 75 years w/o incident. The only thing the city had to do is not screw up the notice requirement. Not a high bar. The notice requirement does not require notice in the neighborhood. It is simply in publications of Public record. The HOA MAY be able to go after the accountant but even that is iffy. Any reasonably competent new accountant should have been aware that the HOA was not making any tax payments.

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