What is the PCOR?

When an Escrow Officer prepares documents to finalize a closing, one of the forms which may not seem important is the “Preliminary Change of Ownership Report” or “PCOR” as we call it. In actuality, this is a particularly important form for a new owner of a property and it is getting more and more attention by the government agencies as time goes by.

First of all, the form is put forth by the State Board of Equalization, one of the collection arms for California’s Revenue and Taxation Code, under Section 480.3 of the Code. Its main function is to determine the taxation of real property (including mobilehomes) so that the proper tax is attached by the Tax Assessor’s office and thereby collected by the Tax Collector’s office. It is a form designed to find out 4 basic things from the property that is being transferred: (1) who are the parties (transferor and transferee), (2) what is the purported value of the transfer (per the purchase contract), (3) is there a Homeowners Exemption that the property qualifies for, and (4) if there should be no re-assessment of the existing property tax, the reason why.

Our Buyers are requested to complete the 2 page form, and given how people hate reading over and completing government forms, many Buyers have no patience for it. An incomplete form does not invalidate the assessment; it just makes it more difficult for the Assessor’s office. If a form is not completed at all and attached to the recording ownership transfer document (grant deed, quitclaim deed and some other documents), then the Recorder’s office has the right to assess an extra charge of $20.00 to the recording fee, which gets paid by the Buyer.

The story does not end there, however, and it just gets better. If the PCOR is not filled out completely or correctly, the Assessors’ office will send out a “Change of Ownership Report (COR)” form directly to the new owners within 6 weeks from the date of transfer (or close escrow date), based on the address and information given on the Grant Deed. Many people receive this in the mail and, given that it is another 2 page legal size form which resembles the PCOR form they completed while in escrow, they tend to disregard it or even throw it away. That would be a very bad move. A new law that passed September of 2011 states that if the mailed request for the COR form is not returned within 90 days, the transferee would be subject to a whopping $5,000.00 penalty, if this is a principal residence and $20,000.00 penalty for properties that are not a principal residence. The State has made it very unforgiving for people who disregard their requests.

Why are these 2 forms, the PCOR and the COR forms important? First and foremost, it provides the taxing agency (County Assessor’s office) with a gauge as to how to re-assess the taxes assigned to your property. California’s base property tax is 1% of the value of the property, and this value is normally determined by the purchase price. If the correct information is not given on this form, the Assessor’s office can assign its own value, which may be much higher than what was paid for.

Another important reason not to disregard this form is when the ownership was not transferred due to sale and taxes should not be re-assessed. In such cases it is imperative that the transferee correctly mark the form. For instance, was this a transfer between spouses? Or a transfer to a Trust? Or perhaps a transfer between parents and children? These forms are used to alert the Assessor’s office not to raise the taxes.

So the next time you receive a Preliminary Change of Ownership form or a Change of Ownership form, don’t disregard it and don’t throw it away. Instead, take a moment to read through the form and complete it correctly. Your property taxes may be placed on the line by what you do or do not do!

For questions regarding the forms and changes in ownership, go to: http://www.boe.ca.gov/proptaxes/faqs/changeinownership.htm

For the actual preliminary change of ownership form, you can access it on our website’s Forms page. Or you can go to: www.assessor.lacounty.gov/extranet/list/forms.aspx and scroll down for the fill-in forms under “Ownership”.