BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1275|
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THIRD READING
Bill No: AB 1275
Author: Chau (D)
Amended: As introduced
Vote: 21
SENATE JUDICIARY COMMITTEE : 7-0, 6/11/13
AYES: Evans, Walters, Anderson, Corbett, Jackson, Leno, Monning
ASSEMBLY FLOOR : 75-0, 5/9/13 - See last page for vote
SUBJECT : Unclaimed property: filing of claims
SOURCE : State Controller John Chiang
DIGEST : This bill revises the Unclaimed Property Law (UPL) to
only allow an owner of, instead of a person with an interest in,
property to file a claim with the State Controller's Office for
recovery of property that has escheated to the state. This bill
also revises the definition of "owner" to remove a personal
representative and include an estate representative,
conservator, or guardian.
ANALYSIS :
Existing law:
1. Requires, under the UPL, holders of personal property
unclaimed for more than three years, as specified, to file a
report and turn over that property to the state.
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2. Authorizes the State Controller to bring an action to enforce
provisions of the UPL and provides for the imposition of
penalties and interest against holders who willfully fail to
comply with the UPL.
3. Authorizes any person, except another state, who claims an
interest in property paid or delivered to the State
Controller to file a claim to the property.
4. Requires the State Controller to consider each claim within
180 days after it is filed and authorizes the State
Controller to hold a hearing and receive evidence on the
claim.
5. Defines "owner" to mean the person who had a legal right to
the property prior to its escheat, his/her heirs, his/her
legal representative, or a public administrator.
This bill:
1. Removes the ability of a person with an interest in the
property to file a claim for the property, and instead,
provides that any person, who claims to be the owner of the
property, may file the claim.
2. Clarifies that the State Controller must consider the claim
for escheated property within 180 days after the claim is
filed in order to determine if the claimant is the owner.
3. Removes in the definition of owner "personal representative"
and adds estate representative, guardian, and conservator.
4. Declares that only an owner may file a claim with the State
Controller to recover the escheated property.
5. Makes other technical and conforming revisions.
Background
The UPL, as revised in 1968, provides for the "escheat" of
unclaimed personal property. Escheat is the reversion of
property to the state by reason of the failure of the owner to
inherit or claim it.
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The UPL establishes procedures to be followed when property goes
unclaimed, generally for a period of three years, and reverts to
the state. Under existing law, the holder must annually report
on unclaimed property and turn the property over to the
Controller. (Code Civil Procedures [CCP] Sections 1530 and
1532.) The UPL also sets forth the procedure for any person who
claims an interest in the property to file a claim to recover
the property from the state. (CCP Sections 1540-1542.)
There are three significant players under the UPL: the owner,
the holder, and the state. The "owner" is the person to whom
the property actually belongs. The "holder" is the person who
has possession of but no interest in the unclaimed property. A
holder is simply a trustee of the property while the property is
in the possession of the holder, and might be a bank (holds
deposits of owner's money), or a business that has issued a
check to an individual or other business.
The UPL has dual objectives: (1) to reunite owners with
unclaimed funds or property, and (2) to give the state, rather
than the holder, the benefit of the use of unclaimed funds or
property. (Bank of America v. Cory (1985) 164 Cal.App.3d 66,
74; Douglas Aircraft Co. v. Cranston (1962) 58 Cal.2d 462, 463.)
The state, through the State Controller, acts as the protector
of the rights of the true owner. (Bank of America, supra, 164
Cal.App.3d at p. 74.)
Prior Legislation
AB 1291 (Niello, Chapter 522, Statutes of 2009) made various
reforms to the UPL (UPL) to strengthen property owners' rights
and ensure that property holders reasonably inform customers
about risks associated with leaving accounts dormant and
potential for escheatment of property after a period of
inactivity.
AB 378 (Steinberg, Chapter 304, Statutes of 2003) reduced the
escheatment period from five years to three years for bank
checks and deposit accounts, and from three years to one year
for wages and salaries.
AB 1772 (Harman, Chapter 813, Statutes of 2002) prescribed the
notice and information that a bank or financial institution must
give to owners of financial accounts that are about to escheat
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to the state, and required the same notice by other holders of
tangible and intangible property subject to the UPL.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 6/12/13)
State Controller John Chiang (source)
Consumer Federation of California
Professional Fiduciary Association of California
OPPOSITION : (Verified 6/12/13)
United Asset Recovery
ARGUMENTS IN SUPPORT : The author's office asserts that this
bill addresses several issues raised in a recent court decision,
Weingarten Realty Investors v. Chiang (2012) 212 Cal.App.4th
163, which held that a judgment creditor could claim, as an
interested party, the judgment debtor's escheated property.
Proponents of this bill assert that this decision creates
confusion and uncertainty because it allows for the possibility
of multiple parties with an interest in the property to submit
competing claims. The State Controller's Office will have to
approve the first claim submitted, without any guidance as to
which claims to the property should be approved and in what
order.
ARGUMENTS IN OPPOSITION : United Asset Recovery (UAR) is
opposed to this bill because they claim that assignees and
creditors are parties that hold a legal interest, title, and
right in property. UAR asserts that although anyone can claim
against the property, only persons with legal rights to the
property can recover it. Furthermore, UAR states that the
Weingarten court properly recognized that the judgment creditor
had a valid legal right to the property. UAR further asserts
that this bill and several court cases call into question the
motives of the State Controller, who they claim has wrongfully
denied several property claims.
ASSEMBLY FLOOR : 75-0, 5/9/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
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Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Ch�vez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,
Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Jones,
Jones-Sawyer, Levine, Linder, Lowenthal, Maienschein, Mansoor,
Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel
P�rez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,
Ting, Torres, Wagner, Weber, Wieckowski, Wilk, Williams,
Yamada, John A. P�rez
NO VOTE RECORDED: Donnelly, Holden, Logue, Waldron, Vacancy
AL:d 6/12/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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