BILL ANALYSIS Ó
AB 212
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Date of Hearing: April 10, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 212 (Lowenthal) - As Introduced: January 31, 2013
Policy Committee: JudiciaryVote:7-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires holders of unclaimed property of less than
$50 in value to notify the property owners and to report owner
information to the State Controller. Specifically, this bill:
1)Removes current provisions exempting holders of unclaimed
property valued at less than $50 from the general requirement
to send due diligence notices to owners that their property
may be transferred to the state unless the owners take certain
actions.
2)Removes the authorization for aggregate reporting by holders
of unclaimed property valued at under $50, unless the name of
the owner is unknown and there is no last known address.
3)Clarifies that the holder may impose a service charge of up to
$2 to send the notification, but only for unclaimed property
valued at over $2.
FISCAL EFFECT
The State Controller's Office (SCO) indicates that, over the
last five years, an average of $13.6 million in
aggregate-reported property has escheated annually to the state.
Under AB 212, each of the individual properties currently
aggregated, for which the holder has identifying information
about the owner, will be reported separately. To the extent this
leads to additional claims paid by the Controller to owners of
this unclaimed property, there will be a corresponding loss of
General Fund revenue that eventually could exceed $150,000
annually. The Controller reports that claim paid out for
AB 212
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aggregated properties have totaled only $33,000 for the last
five years.
According to the SCO, there will not be any increase in claims
paid until one year after the bill's effective date. The
earliest this could occur would be for property report received
for 2015, thus there will not be any increase on claims paid
until 2016-17.
The SCO asserts that, because its various UPL administrative
processes are largely automated or soon will be, the bill will
not result in any additional operating costs.
COMMENTS
1)Background . Holders of unclaimed property are generally
required to: (1) send due diligence notices to owners
identifying the property and notifying them that the property
may escheat to the state unless certain action is taken; and
(2) report to the Controller the owner's name, address, and
other information appearing in the holder's records. If the
unclaimed property is valued at less than $50, however, the
holder is not required to provide any due diligence notice to
the owner, nor to report identifying information about the
property and its owner to the Controller-even if such
information is contained in the holder's own records of the
property. Many small properties valued at under $50 may
instead be combined into a lump sum amount without identifying
information, and reported in aggregate to the Controller as a
single line item.
2)Purpose . AB 212, sponsored by the Controller, eliminates the
aggregate reporting authorization and the exemption from due
diligence notification and instead requires holders to report
every individual unclaimed property item valued at under $50,
if information about the owner is known, and to provide
notification to these owners that their property might escheat
to the state. The sponsor argues that these current provisions
are inconsistent with the unclaimed property program's overall
mission to reunite owners with their rightful property.
3)Opposition . The California Credit Union League and the
California Bankers Association (CBA) argue that the bill will
impose significant administrative and fiscal burdens for their
member institutions. The CBA seeks amendments to remove the
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due diligence notification requirement and to delay the
operative date to January 1, 2015.
4)The Unclaimed Property Law (UPL), enacted in 1958, establishes
procedures for the escheat of unclaimed personal property.
Property escheated to the state means the state has custody of
the property in perpetuity, until the owner claims the
property. Under the UPL, the "owner" is the person to whom
the property actually belongs and the "holder" is the person
or entity that has possession of the property. The holder
might be a bank or other money depositary or a business that
has issued a check to an individual or other business, or a
life insurance or annuity.
The UPL is intended to locate owners and restore their
property to them and to give the state, rather than the
holders of unclaimed property, the benefit of its retention,
since experience shows that most abandoned property will never
be claimed. The state, through the Controller, acts as the
protector of the rights of the true owner.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081