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BTLG Table of Contents > Sales and Use Tax Annotations > S > 535.0000 Successor's Liability > Annotation 535.0025

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535.0000 Successor's Liability—Regulation 1702

Annotation 535.0025

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535.0025 Foreclosed on the Security. A trust was the holder of a note from a limited partnership that owned and operated a hotel. The note was secured by the property. The limited partnership defaulted on the note and the trust foreclosed on the property. The real property and improvements were acquired by the trust as the bidding beneficiary at a trustee's sale. The personal property, including the furniture, fixture, equipment, and inventory were also acquired by the trust at the trustee's sale pursuant to section 9501(a)(ii) of the California Uniform Commercial Code.

The trust will sell the furniture, fixtures, equipment and inventory to a new operator of the hotel. It will sell the real property and improvements to an investor. The investor will in turn lease the real property and improvements to the new hotel operator.

The foreclosing on the mortgage by the trust does not result in the trust incurring successor's liability for the sales and use tax liability owed by the original hotel owner and operator or any prior predecessor. Also, neither does the new hotel operator nor the investor incur successor's liability for the liability of the original hotel owner and operator or any predecessors. (Regulation 1702(a).) 9/26/94.