BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



           ----------------------------------------------------------------- 
          |SENATE RULES COMMITTEE            |                       AB 1275|
          |Office of Senate Floor Analyses   |                              |
          |1020 N Street, Suite 524          |                              |
          |(916) 651-1520         Fax: (916) |                              |
          |327-4478                          |                              |
           ----------------------------------------------------------------- 
           
                                           
                                    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.  

                                                                CONTINUED





                                                                    AB 1275
                                                                     Page  
          2

          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.


                                                                CONTINUED





                                                                    AB 1275
                                                                     Page  
          3

          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  

                                                                CONTINUED





                                                                    AB 1275
                                                                     Page  
          4

          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,  

                                                                CONTINUED





                                                                    AB 1275
                                                                     Page  
          5

            Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,  
            Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,  
            Cooley, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier,  
            Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,  
            Grove, Hagman, Hall, Harkey, Roger Hernández, Jones,  
            Jones-Sawyer, Levine, Linder, Lowenthal, Maienschein, Mansoor,  
            Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,  
            Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel  
            Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,  
            Ting, Torres, Wagner, Weber, Wieckowski, Wilk, Williams,  
            Yamada, John A. Pérez
          NO VOTE RECORDED: Donnelly, Holden, Logue, Waldron, Vacancy

          AL:d  6/12/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

                                   ****  END  ****



























                                                                CONTINUED