Legal Question in Real Estate Law in California

Sure. A buyer and seller can dream up almost any way or formula to determine and justify the total consideration paid by the buyer to the seller. But does it really make sense to structure the pricing in such an unfamiliar way? It is customary for buyer and seller to pro-rate property taxes in escrow, based on the actual change-of-ownership date, but it doesn't have to be that way. Just make sure that the proper amount gets paid at the proper time, and keep in mind that the sale itself will require disclosure of the price paid and that the tax rate will be adjusted, up or down, to reflect the sale price.

Mr. Whipple is correct within his assumptions, but he seems to be ignoring the "carrying the paperwork" part of your question. Without knowing what you mean by that, there can be no reliable answer. "Carrying" usually means you are going to accept some or all of the purchase price as a debt owed to you. Your question about taxes also implies that you might not intend to transfer title until you are paid in full. If you are doing either or both of those things, you are creating a reasonable deal, but one that has very significant tax and legal implications that you are almost sure to mess up if you don't spend a few hundred to a couple of thousand dollars to have an attorney help you with.

I carefully read Mr. McCormick's response, and agree that it sounds as though you are mixing up two types of security devices. In a true carry back situation, a portion of the purchase price is a debt that is secured by a deed of trust on the property. The buyer gets a deed, but the property is encumbered by the deed of trust in favor of the seller. The buyer is entitled to possession, and would pay the property taxes. The deed of trust, of course, would be considered purchase money pursuant to Code of Civil Procedure section 580b.

When you don't transfer title, the situation is usually governed by an "installment land sale contract." In that situation the buyer takes possession, but does not get title until all payments have been made under a written contract to the seller. In that scenario, the seller's name is on title. You can structure an installment land sale contract so that the buyer is obligated to pay the property taxes, but I do suggest that you at least have the transaction reviewed by a competent real estate attorney, as there are some advantages and drawbacks to each situation.