The Property Transfer Affidavit (Form 2766) is a result of the Proposal A reforms. The form is used to inform the local assessor of the transfer (sale, inheritance, etc.) of property. Proposal A "caps", or limits, the rate of increase of your property’s "taxable value" (the value used to calculate your tax bill). The taxable value cannot rise faster than the rate of inflation (excepting value added through additions or deletions to the property) until the property is transferred. In the tax year following the transfer of the property, the taxable value will "uncap" and become equal to the "assessed value". Assessed value is one-half of the assessor’s estimate of the market value of your property. In order to ensure that this "uncapping" adjustment is made on all transferred property, the law now requires the transferee (buyer, inheritor, etc.) to file this form within 45 days of the transfer.
Failure to file a Property Transfer Affidavit can have serious consequences. If several years have elapsed when the transfer is discovered, you could be billed for all additional tax which should have been levied each year since the time the uncapping would normally have occurred, including penalty and interest.
Title companies generally make this form available to buyers at the closing. The title company usually handles mailing the form to the assessor as well. However, it is in your best interest to be certain that the assessor receives it.