BILL ANALYSIS Ó
AB 355
Page 1
ASSEMBLY THIRD READING
AB
355 (Eduardo Garcia)
As Amended March 17, 2015
Majority vote
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|Committee |Votes |Ayes |Noes |
|----------------+------+--------------------+--------------------|
|Judiciary |10-0 |Mark Stone, Wagner, | |
| | |Alejo, Chau, Chiu, | |
| | |Cristina Garcia, | |
| | |Gallagher, Holden, | |
| | |Maienschein, | |
| | |O'Donnell | |
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SUMMARY: Revises information that holders of property contained
in safe deposit boxes must report to the State Controller
(Controller) upon escheat of the contents. Specifically, this
bill requires the business association holding the contents of the
safe deposit box to additionally include in its report to the
Controller any name attached to a United States (U.S.) Savings
Bond or military award inside the safe deposit box that is
different from the name of the owner.
EXISTING LAW:
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1)Provides that the contents of a safe deposit box held by a
business association shall escheat to the state if unclaimed by
the property owner for more than three years.
2)Requires the business association that holds the property to
notify the apparent owner, if known, that the owner's contents,
or the proceeds of the sale of the contents, will escheat to the
state if unclaimed, and requires this notice to be provided not
less than six months and not more than 12 months before the time
the contents, or the proceeds of the sale of the contents,
become reportable to the Controller.
3)Prescribes the content of the above notice, including, among
other things: an identification of the safe deposit box by
number or identifier; a statement that the contents of, or the
proceeds of sale of the contents of, the safe deposit box will
escheat to the state unless the owner requests the contents or
their proceeds; and advice to the owner to make arrangements
with the business association to either obtain possession of the
contents of, or the proceeds of sale of the contents of, the
safe deposit box or other safekeeping repository, or enter into
a new agreement with the business association to establish a
leasing or rental arrangement.
4)Provides that every person holding the contents of any safety
deposit box that has escheated to the state shall report
annually to the Controller a description of the escheated
property and the place where it is held and may be inspected by
the Controller. Further requires the report to set forth any
amounts owing to the holder for unpaid rent or storage charges
and the cost of opening the safe deposit box, if any, in which
the property was contained.
FISCAL EFFECT: None
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COMMENTS: According to the author, this bill, sponsored by the
State Controller's Office (SCO), will help the SCO reunite owners
of savings bonds or military awards with their property when that
property was contained in a safe deposit box belonging to a
different person that escheated to the state. The author
explains:
The State Controller can only list the owner of the
property that has reverted to the state, not an owner of
a separate piece of property that is a subset of the
larger piece of property. This becomes a problem in the
case of a safe deposit box, where the box itself may be
in one person's name, but some of the contents - for
example, military awards or U.S. Savings Bonds - may
clearly be in another person's name. The State
Controller is currently holding about 70,000 U.S.
Savings Bonds, the majority of which have reached
maturity and are no longer earning interest.
Institutions that must escheat safe deposit boxes to the
State Controller currently have report to the Controller
a description of the items in the box and a place where
the items can be inspected, the name of the owner of the
safe deposit box, but they do not report any other name
associated with the items inside the safe deposit box.
Background of the Unclaimed Property Law: 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, there are three
significant parties: the owner, the holder, and the state. The
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"owner" is the person to whom the property actually belongs. The
"holder" is the person or entity who has possession of the
property. The holder might be a bank or other money depositary
(e.g., holds deposits of owner's money, holds property in a safe
deposit box), or a business that has issued a check to an
individual or other business, or a life insurance or annuity.
Holders of unclaimed property have no interest in the unclaimed
property. (Bank of America v. Cory (1985) 164 Cal.App.3d 66, 74).
A holder is simply a trustee of the property while the property
is in the possession of the holder. However, while the property
is in the custody of the holder, the holder generally uses the
funds or the property as an asset.
The UPL establishes procedures to be followed when property goes
unclaimed, generally for a period of three years, and escheats to
the state. Under existing law, the holder must annually report on
unclaimed property and turn the property over to the Controller.
In turn, the Controller is required to mail a notice to each
person who appears to be entitled to unclaimed property according
to the report filed by a holder, as well as publish a notice to
unclaimed property owners in a newspaper of general circulation.
A person with an interest in escheated property may file a claim
to recover the property from the state. The Controller maintains
a Web site ( http://www.sco.ca.gov ) where members of the public may
search a database to discover if the state is holding any of their
property, and may submit claims to recover the funds or property.
Limited name reporting requirement for U.S. savings bonds and
military awards. Existing law requires the holder of escheated
property to report to the Controller the name and last known
address of each person appearing from the records of the holder to
be the owner of the escheated property. In the case of a safe
deposit box or other safekeeping repository, the holder's records
generally indicate the name of the person who had opened the safe
deposit account and was responsible for making rent payments on
the box. With respect to the contents of a safe deposit box,
however, existing law only requires the holder of the escheated
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property to report to the Controller a description of the
property, the place where it is held and may be inspected, and any
amounts owing to the holder for unpaid rent, storage charges, or
the cost of opening the safe deposit box. As the author and
sponsor point out, existing law does not require the report to the
Controller to include any name attached to or appearing on a
particular item found in the safe deposit box that may indicate
ownership of that item. For example, a U.S. Savings Bond issued
to Mary Smith that was discovered in a safe deposit box rented by
her father John Brown among other contents belonging to him would
not itself be searchable in the Controller's database as unclaimed
property belonging to Mary Smith.
To address instances such as these, this bill would require any
name "attached to" a U.S. Savings Bond or military award inside
the safe deposit box that is different from the name of the owner
of the box to also be reported to the Controller. Recent
amendments to the bill limit this rule to U.S. savings bonds and
military awards, which, according to the author, are two types of
property that are often found in escheated safe deposit boxes and
whose owner is readily identifiable by the name attached to or
appearing on the item itself. In the case of U.S. savings bonds,
the name of the holder of the bond appears on the bond itself,
indicating its ownership and possibly distinguishing it from the
deposit box owner. In the case of military awards or medals,
however, the name of the recipient may or may not be inscribed on
the award itself. For example, it may be housed in a small
display carrying case with an accompanying certificate issued by
the U.S. government naming the recipient. According to
proponents, the term "attached to" is not meant to require literal
attachment, for example, of a certificate to a medal, but rather,
a clear indication that the "attached" name is the name of the
individual to whom the savings bond or military award was issued
or awarded.
Because the name of the owner of the safe deposit box's contents
must already be reported on the form prescribed by the Controller,
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this bill would only result in a modest, occasional obligation
upon holders to report an additional name in cases where a savings
bond or military award is found inside and indicates a different
name than the owner of the box's contents.
Analysis Prepared by:
Anthony Lew / JUD. / (916) 319-2334 FN: 0000074