California law allows an owner of a qualified contaminated property to transfer the base year value of
that property to a comparable replacement property of equal or lesser value that is acquired or newly
constructed after January 1, 1995. In addition, a replacement property must meet all of the following
requirements: (1) It must have been acquired or newly constructed within five (5) years after the date of the
sale or transfer; (2) it must be used in the same manner as the qualified contaminated property; and (3) a
claim for relief must be filed within three (3) years after the replacement property is acquired or newly
constructed.
Both the original property and the replacement property must be located in the same county. If not, the
county in which the replacement property is located must have a resolution authorizing intercounty transfers
under this code section.
A qualified contaminated property must meet all of the following:
• Residential property that is uninhabitable or nonresidential property that is unusable as a result of the
environmental problems.
• Located on a site that has been designated as a toxic or environmental hazard or as an environmental
clean-up site by an agency of the State of California or the federal government.
• Owned by a person or entity that did not participate or acquiesce in any act or omission that rendered
the property uninhabitable or unusable. The owner cannot be related to the person or affiliated with the
entity that committed the act or omission that contaminated the property.
In general, equal or lesser value of a replacement property means that the fair market value of the replacement
property on the date of purchase or completion of new construction does not exceed:
• 105 percent of market value of original property as if uncontaminated if a replacement property is purchased
or newly constructed within the first year following the date of sale or transfer of the original property;
• 110 percent of market value of original property as if uncontaminated if a replacement property is
purchased or newly constructed within the second year following the date of sale or transfer of the original
property;
• 115 percent of market value of original property as if uncontaminated if a replacement property is purchased
or newly constructed within the third year following the date of sale or transfer of the original property;
• 120 percent of market value of original property as if uncontaminated if a replacement property is
purchased or newly constructed within the fourth year following the date of sale or transfer of the original
property;
• 125 percent of market value of original property as if uncontaminated if a replacement property is purchased
or newly constructed within the fifth year following the date of sale or transfer of the original property.
If you feel you qualify for this exclusion, you must provide evidence that (1) your property meets the definition
of a qualified contaminated property, and (2) you did not participate or acquiesce in any act or omission that
rendered the property uninhabitable or unusuable or are related to the person or affiliated with the entity
that committed the act or omission that contaminated the property.
DECLARATION BY ASSESSEE. The declaration must be signed by the assessee, a duly appointed fiduciary,
or a person authorized to sign on behalf of the assessee. In the case of a corporation, the declaration must
be signed by an officer or an employee of the corporation authorized to sign the declaration on behalf of
the corporation. In the case of a partnership, the declaration must be signed by a partner or an authorized
employee or agent. In the case of a limited liability company (LLC), the declaration must be signed by an
LLC manager, or by a member where there is no manager, or by an employee or agent designated by the
LLC manager or by the members to sign on behalf of the LLC.
