BILL NUMBER: AB 1291 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 2, 2009
INTRODUCED BY Assembly Member Niello
FEBRUARY 27, 2009
An act to amend Sections 1513, 1513.5, 1514, 1516,
1520, 1532, 1540, 1560, 1563, 1565, and 1577 of
the Code of Civil Procedure, relating to unclaimed property.
LEGISLATIVE COUNSEL'S DIGEST
AB 1291, as amended, Niello. Unclaimed property.
Existing law, the Unclaimed Property Law, governs the disposition
of unclaimed property, including the escheat of certain property to
the state. Those provisions require a person holding funds or other
property escheated to the state to report to the Controller certain
information regarding the property and the owner.
Existing law provides for the escheat to the state of (1) certain
deposits or accounts made with a banking organization, together with
other specified sums, (2) certain deposits, accounts, investment
certificates, or other interests in or deposits made with a financial
organization, together with other specified sums, and (3) certain
funds held by a business association in specified retirement accounts
or plans, when the owner, for more than 3 years, has not taken any
of certain actions, except as specified.
This bill would modify the actions that, if not taken by the owner
for more than 3 years, lead to the escheat of the property described
above by adding to those actions the receipt of tax reports or
regular statements by mail from the banking organization, financial
organization, or business association regarding the funds, deposit,
account, or plan. The bill would provide that receipt of a report or
statement by the owner shall be presumed if the organization or
association sent the report or statement to the owner by first-class
mail and the report or statement was not returned.
Existing law requires certain entities to make reasonable efforts
to notify owners of certain property, by mail, that the property will
escheat to the state under specified provisions of law.
This bill would allow those entities to notify an owner described
above electronically when the owner has consented to electronic
notifications.
Existing law requires the holder of certain property, including
certain property held by a banking or financial organization, certain
sums held or owing by a business association to shareholders or
other specified persons, and tangible property that is held in the
ordinary course of the holder's business, to notify the owner, at
prescribed times, of information regarding escheat.
This bill would require that those notices contain certain
information and would allow the holder to give additional notices, as
specified. The bill would require that, at the time a new account is
opened with a banking or financial organization, the organization
provide a written notice to the person opening the account regarding
escheat.
Existing law provides that the contents of any safe deposit box or
any other safekeeping repository held in this state by a business
association escheat to the state if unclaimed by the owner for more
than three years from the date on which the lease or rental period on
the box or other repository expired, or from the date of termination
of another specified agreement, whichever last occurs.
This bill would provide, instead, that the contents of a safe
deposit box or other safekeeping repository, or the proceeds of sale
of those contents, escheat to the state if unclaimed for more than 5
years from the later of the 2 dates described above. The bill would
require the business association to notify the owner of the contents
of a safe deposit box twice, at specified times, regarding escheat,
and would specify the contents of the notice. The bill would also
require a business association to provide a notice regarding escheat
to a person opening a safe deposit box. The bill would provide for a
form by which the customer may declare an intention to maintain the
safe deposit box or other safekeeping repository and would authorize
the business association to impose a service charge for this notice.
The bill would provide that the contents of a safe deposit box shall
not escheat to the state under certain circumstances.
Existing law requires every person holding funds or other property
escheated to the state to report to the Controller, as specified.
Existing law every person filing such a report to pay or deliver to
the Controller all escheated property specified in the report within
a certain period.
This bill would allow the Controller to postpone the date for
payment or delivery of the property, and the date for any report
required by the above provisions, upon his or her own motion or upon
written request by any person required to pay or deliver the property
or file a report.
Existing law allows any person, excluding another state, who
claims an interest in property paid or delivered to the Controller
under the above provisions of law to file a claim to the property or
to the net proceeds from its sale. Existing law requires the
Controller to consider each claim within 180 days after it is filed.
This bill would require the Controller to add interest, at a
prescribed rate, to the amount of any claim paid to the owner under
these provisions for the period the property was on deposit in the
Unclaimed Property Fund, except as specified. It would require a
holder who pays to the owner property that has escheated to the state
and that, if claimed from the Controller, would be subject to the
provisions regarding the payment of interest to add interest in
accordance with those provisions, and would require the Controller to
repay that interest to the holder.
Existing law provides that a person who pays or delivers escheated
property to the Controller under the above provisions is relieved of
all liability to the extent of the value of the property paid or
delivered for any claim that then exists or that thereafter may
arise.
This bill would provide, instead, that a person who pays or
delivers escheated property to the Controller under the above
provisions and who, prior to escheat, if the person's records contain
an address for the apparent owner, has made reasonable efforts to
notify the owner by mail or electronically that the customer's
property, deposit, account, shares, or other interest will escheat to
the state, is relieved of all liability to the extent of the value
of the property paid or delivered for any claim that then exists or
that thereafter may arise.
Existing law provides for the disposition of securities held by
the Controller under the above provisions. Existing law provides
that, if the securities have been sold, a person making a valid claim
shall be entitled to receive the net proceeds received by the
Controller from the sale of the securities.
This bill would provide, instead, that a person making a valid
claim under the above provisions after the securities have been sold
shall be entitled to receive the net proceeds from the sale and shall
not be entitled to receive any appreciation in the market value of
the securities occurring after the sale by the Controller.
Existing law requires that any property delivered to the
Controller pursuant to the above provisions that has no apparent
commercial value be retained by the Controller for not less than 18
months from the date the property is delivered to the Controller.
This bill would require, instead, that the Controller retain that
property for not less than 7 years.
Existing law requires that any person who fails to report, pay, or
deliver unclaimed property within the time prescribed by these
provisions, unless that failure is due to reasonable cause, pay to
the Controller interest at the rate of 12% per annum on that property
or value thereof from the date the property should have been
reported, paid, or delivered
This bill would require, in addition, that any person who fails to
file a report in the time and manner required by specified
provisions of law, unless that failure is due to reasonable cause,
pay to the Controller interest as described above.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1513 of the Code of
Civil Procedure is amended to read:
1513. (a) Subject to Sections 1510 and
1511, the following property held or owing by a business association
escheats to this state:
(a)
(1) (A) Except as
provided in subdivision (f) paragraph (6)
, any demand, savings, or matured time deposit, or account
subject to a negotiable order of withdrawal, made with a banking
organization, together with any interest or dividends thereon,
excluding, from demand deposits and accounts subject to a negotiable
order of withdrawal only, any reasonable service charges that may
lawfully be withheld and that do not (where made in this state)
exceed those set forth in schedules filed by the banking organization
from time to time with the Controller, when the owner, for more than
three years, has not done any of the following:
(1)
(i) Increased or decreased the amount of the deposit,
cashed an interest check, or presented the passbook or other similar
evidence of the deposit for the crediting of interest.
(2)
(ii) Corresponded electronically or in writing with the
banking organization concerning the deposit.
(3)
(iii) Otherwise indicated an interest in the deposit as
evidenced by a memorandum or other record on file with the banking
organization.
(iv) Received tax reports or regular statements by mail from the
banking organization regarding the funds or deposit. Receipt of a
report or statement by the owner shall be presumed if the banking
organization sent the report or statement to the owner by first-class
mail and the report or statement was not returned.
A
(B) A deposit or account shall
not, however, escheat to the state if, during the previous three
years, the owner has owned another deposit or account with the
banking organization and, with respect to that deposit or account,
the owner has done any of the acts described in paragraph
(1), (2), or (3) clause (i), (ii), (iii), or (iv) of
subparagraph (A) , and the banking organization has
communicated electronically or in writing with the owner, at the
address to which communications regarding that deposit or account are
regularly sent, with regard to the deposit or account that would
otherwise escheat under this subdivision. For purposes of this
subdivision, "communications" means account statements or statements
of interest paid for federal and state income tax purposes.
No
(C) No banking organization may
discontinue any interest or dividends on any savings deposit because
of the inactivity contemplated by this section.
(b)
(2) (A) Except as
provided in subdivision (f) paragraph (6)
, any demand, savings, or matured time deposit, or matured
investment certificate, or account subject to a negotiable order of
withdrawal, or other interest in a financial organization or any
deposit made therewith, and any interest or dividends thereon,
excluding, from demand deposits and accounts subject to a negotiable
order of withdrawal only, any reasonable service charges that may
lawfully be withheld and that do not (where made in this state)
exceed those set forth in schedules filed by the financial
organization from time to time with the Controller, when the owner,
for more than three years, has not done any of the following:
(1)
(i) Increased or decreased the amount of the funds or
deposit, cashed an interest check, or presented an appropriate record
for the crediting of interest or dividends.
(2)
(ii) Corresponded electronically or in writing with the
financial organization concerning the funds or deposit.
(3)
(iii) Otherwise indicated an interest in the funds or
deposit as evidenced by a memorandum or other record on file with the
financial organization.
(iv) Received tax reports or regular statements by mail from the
financial organization regarding the funds or deposit. Receipt of a
report or statement by the owner shall be presumed if the financial
organization sent the report or statement to the owner by first-class
mail and the report or statement was not returned.
A
(B) A deposit or account shall
not, however, escheat to the state if, during the previous three
years, the owner has owned another deposit or account with the
financial organization and, with respect to that deposit or account,
the owner has done any of the acts described in paragraph
(1), (2), or (3) clause (i), (ii), (iii), or (iv) of
subparagraph (A) , and the financial organization has
communicated electronically or in writing with the owner, at the
address to which communications regarding that deposit or account are
regularly sent, with regard to the deposit or account that would
otherwise escheat under this subdivision. For purposes of this
subdivision, "communications" means account statements or statements
of interest paid for federal and state income tax purposes.
No
(C) No financial organization may
discontinue any interest or dividends on any funds paid toward
purchase of shares or other interest, or on any deposit, because of
the inactivity contemplated by this section.
(c)
(3) Any sum payable on a traveler's check issued by a
business association that has been outstanding for more than 15 years
from the date of its issuance, when the owner, for more than 15
years, has not corresponded in writing with the business association
concerning it, or otherwise indicated an interest as evidenced by a
memorandum or other record on file with the association.
(d)
(4) Any sum payable on any other written instrument on
which a banking or financial organization is directly liable,
including, by way of illustration but not of limitation, any draft or
certified check, that has been outstanding for more than three years
from the date it was payable, or from the date of its issuance if
payable on demand, when the owner, for more than three years, has not
corresponded electronically or in writing with the banking or
financial organization concerning it, or otherwise indicated an
interest as evidenced by a memorandum or other record on file with
the banking or financial organization.
(e)
(5) Any sum payable on a money order issued by a
business association (including a banking or financial organization),
that has been outstanding for more than seven years from the date it
was payable, or from the date of its issuance if payable on demand,
excluding any reasonable service charges that may lawfully be
withheld and that do not, when made in this state, exceed those set
forth in schedules filed by the business association from time to
time with the Controller, when the owner, for more than seven years,
has not corresponded electronically or in writing with the business
association, banking, or financial organization concerning it, or
otherwise indicated an interest as evidenced by a memorandum or other
record on file with the business association. For the purposes of
this subdivision, "reasonable service charge" means a service charge
that meets all of the following requirements:
(1)
(A) It is uniformly applied to all of the issuer's
money orders.
(2)
(B) It is clearly disclosed to the purchaser at the
time of purchase and to the recipient of the money order.
(3)
(C) It does not begin to accrue until three years after
the purchase date, and it stops accruing after the value of the
money order escheats.
(4)
(D) It is permitted by contract between the issuer and
the purchaser.
(5)
(E) It does not exceed 25 cents ($0.25) per month or
the aggregate amount of twenty-one dollars ($21).
(f)
(6) (A) Any funds held
by a business association in an individual retirement account or
under a retirement plan for self-employed individuals or similar
account or plan established pursuant to the internal revenue laws of
the United States or of this state, when the owner, for more than
three years after the funds become payable or distributable, has not
done any of the following:
(1)
(i) Increased or decreased the principal.
(2)
(ii) Accepted payment of principal or income.
(3)
(iii) Corresponded electronically or in writing
concerning the property or otherwise indicated an interest.
(iv) Received tax reports or regular statements by mail from the
business association regarding the account or plan. Receipt of a
report or statement by the owner shall be presumed if the business
association sent the report or statement to the owner by first-class
mail and the report or statement was not returned.
These
(B) These funds are not payable
or distributable within the meaning of this subdivision unless, under
the terms of the account or plan, distribution of all or a part of
the funds would then be mandatory.
(g)
(7) Any wages or salaries that have remained unclaimed
by the owner for more than one year after the wages or salaries
become payable.
(h)
(b) For purposes of this section "service charges"
means service charges imposed because of the inactivity contemplated
by this section.
SECTION 1. SEC. 2. Section 1513.5 of
the Code of Civil Procedure is amended to read:
1513.5. (a) Except as provided in subdivision (c), if the holder
has in its records an address for the apparent owner, which the
holder's records do not disclose to be inaccurate, every banking or
financial organization shall make reasonable efforts to notify
by mail any customer any customer by mail or,
if the customer has consented to electronic notifications,
electronically, that the customer's deposit, account, shares,
or other interest in the banking or financial organization will
escheat to the state pursuant to subdivision (a) or (b)
paragraph (1) or (2) of subdivision (a) of
Section 1513. The holder shall give notice either:
(1) Not less than two years nor more than two and one-half years
after the date of last activity by, or communication with, the owner
with respect to the account, deposit, shares, or other interest, as
shown on the record of the financial organization.
(2) Not less than six nor more than 12 months before the time the
account, deposit, shares, or other interest becomes reportable to the
Controller in accordance with this chapter.
(b) The notice required by this section shall specify the time
that the deposit, account, shares, or other interest will escheat and
the effects of escheat, including the necessity for filing a claim
for the return of the deposit, account, shares, or other interest.
The face of the notice shall contain a heading centered at the top
that reads as follows: "THE STATE OF CALIFORNIA REQUIRES US TO NOTIFY
YOU THAT YOUR UNCLAIMED PROPERTY MAY BE TRANSFERRED TO THE STATE IF
YOU DO NOT CONTACT US," or substantially similar language. The notice
required by this section shall, in bold or in a font a minimum of
two points larger than the rest of the notice, (1) specify that since
the date of last activity, or for the last two years, there has been
no customer activity on the deposit, account, shares, or other
interest; (2) identify the deposit, account, shares, or other
interest by number or identifier; (3) indicate that the deposit,
account, shares, or other interest is in danger of escheating to the
state; and (4) specify that the California Unclaimed Property Law
requires banks, banking organizations, and financial organizations to
transfer funds of a deposit, account, shares, or other interest if
it has been inactive for three years. It shall also include a form,
as prescribed by the Controller, by which the customer may declare an
intention to maintain the deposit, account, shares, or other
interest. If that form is filled out, signed by the customer, and
returned to the banking or financial organization, it shall satisfy
the requirement of paragraph (3) of subdivision (a) or
paragraph (3) of subdivision (b) clause (iii) of
subparagraph (A) of paragraph (1), or clause (iii) of subparagraph
(A) of paragraph (2), of subdivision (a) of Section 1513. The
banking or financial organization may impose a service charge on the
deposit, account, shares, or other interest for this notice in an
amount not to exceed the administrative cost of mailing the notice
and form and in no case to exceed two dollars ($2).
(c) Notice as provided by subdivisions (a) and (b) shall not be
required for deposits, accounts, shares, or other interests of less
than fifty dollars ($50), and no service charge may be made for
notice on these items.
(d) In addition to the notices required pursuant to subdivision
(a), the holder may give additional notice as described in
subdivision (b) at any time between the date of last activity by, or
communication with, the owner and the date the holder transfers the
deposit, account, shares, or other interest to the Controller.
(e) At the time a new account is opened with a banking or
financial organization, the organization shall provide a written
notice to the person opening the account informing the person that
his or her property may be transferred to the applicable state if no
activity occurs in the account within the time period specified by
state law.
SEC. 2. SEC. 3. Section 1514 of the
Code of Civil Procedure is amended to read:
1514. (a) The contents of, or the proceeds of sale of the
contents of, any safe deposit box or any other safekeeping
repository, held in this state by a business association, escheat to
this state if unclaimed by the owner for more than five years from
the date on which the lease or rental period on the box or other
repository expired, or from the date of termination of any agreement
because of which the box or other repository was furnished to the
owner without cost, whichever last occurs.
(b) If a business association has in its records an address for an
apparent owner of the contents of, or the proceeds of sale of the
contents of, a safe deposit box or other safekeeping repository
described in subdivision (a), and the business association's records
do not disclose the address to be inaccurate, the business
association shall make reasonable efforts to notify the owner by
mail, or, when the owner has consented to electronic notifications,
electronically, that the owner's contents will escheat to the state
pursuant to this section. The business association shall give notice
at each of the following two times before the date the contents
become reportable to the Controller in accordance with this chapter:
(1) Not less than two and one-half years and not more than three
years before that date.
(2) Not less than six and not more than 12 months before that
date.
(c) (1) The notice required by subdivision (b) shall, in bold or
in a font a minimum of two points larger than the rest of the notice,
exclusive of the heading, do all of the following:
(A) Specify that since the date of last activity or for the last
two years or four years, as appropriate, there has been no customer
activity on the safe deposit box or other safekeeping repository.
(B) Identify the safe deposit box or other safekeeping repository
by number or identifier.
(C) Indicate that the contents of the safe deposit box or other
safekeeping repository are in danger of escheating to the state.
(D) Specify that the California Unclaimed Property Law requires
business associations to transfer the contents of a safe deposit box
or other safekeeping repository to the Controller if it has been
inactive for five years.
(2) The face of the notice required by subdivision (b) shall
contain a heading centered at the top that reads as follows:
"THE STATE OF CALIFORNIA REQUIRES US TO NOTIFY YOU THAT YOUR
UNCLAIMED PROPERTY MAY BE TRANSFERRED TO THE STATE IF YOU DO NOT
CONTACT US," or substantially similar language.
(3) The notice shall also include a form, as prescribed by the
Controller, by which the customer may declare an intention to
maintain the safe deposit box or other safekeeping repository by
either renewing the lease, rental period, or agreement, or otherwise
taking possession of the property from the banking or financial
organization. If that form is filled out, signed by the customer, and
returned to the business association, it shall be considered as a
claim for the safe deposit box or other safekeeping repository and
the contents shall not escheat. The business association may impose a
service charge on the safe deposit box or other safekeeping
repository for this notice in an amount not to exceed the
administrative cost of mailing the notice and form, and in no case to
exceed two dollars ($2).
(d) In addition to the notices required pursuant to subdivision
(b), the business association may give additional notice in
accordance with subdivision (c) at any time between the date of the
last activity by, or communication with, the owner and the date the
business association transfers the contents of the safe deposit box
or other safekeeping repository to the Controller.
(e) A safe deposit box or other safekeeping repository shall not,
however, escheat to the state if, during the previous five years, the
owner has owned any demand, savings, or matured time deposit, or
account subject to a negotiable order of withdrawal, made with a
banking organization or financial organization and, with respect to
that deposit or account, the owner has done any of the acts described
in paragraph (1), (2), or (3) clause (i),
(ii), (iii), or (iv) of subparagraph (A) of paragraph (1) of
subdivision (a) of Section 1513 and the financial organization has
communicated electronically or in writing with the owner, at the
address to which communications regarding that deposit or account are
regularly sent, with regard to the deposit or account that would
otherwise escheat under that section. For purposes of this
subdivision, "communications" means account statements of interest
paid for federal and state income tax purposes. Notwithstanding the
foregoing, in the event the customer is in default under the safe
deposit box or other safekeeping repository agreement, the banking
organization or financial organization may pay or deliver the
contents of, or the proceeds of sale of the contents of, the safe
deposit box or other safekeeping repository to the customer after
deducting any amount due and payable from those proceeds under that
agreement. Upon making that payment or delivery under this
subdivision, the banking organization or financial organization shall
be relieved of all liability to the extent of the value of those
contents or proceeds.
(f) At the time a new account for a safe deposit box or other
safekeeping repository is opened with a business association, the
association shall provide a written notice to the person opening the
account informing the person that his or her property may be
transferred to the applicable state if no activity occurs in the
account within the time period specified by state law.
(g) A banking organization may directly escheat the contents of a
safe deposit box or other safekeeping repository without exercising
its rights under Article 2 (commencing with Section 1660) of Chapter
13 of Division 1 of the Financial Code
SEC. 3. SEC. 4. Section 1516 of the
Code of Civil Procedure is amended to read:
1516. (a) Subject to Section 1510, any dividend, profit,
distribution, interest, payment on principal, or other sum held or
owing by a business association for or to its shareholder,
certificate holder, member, bondholder, or other security holder, or
a participating patron of a cooperative, who has not claimed it, or
corresponded in writing with the business association concerning it,
within three years after the date prescribed for payment or delivery,
escheats to this state.
(b) Subject to Section 1510, any intangible interest in a business
association, as evidenced by the stock records or membership records
of the association, escheats to this state if (1) the interest in
the association is owned by a person who for more than three years
has neither claimed a dividend or other sum referred to in
subdivision (a) nor corresponded in writing with the association or
otherwise indicated an interest as evidenced by a memorandum or other
record on file with the association, and (2) the association does
not know the location of the owner at the end of the three-year
period. With respect to the interest, the business association shall
be deemed the holder.
(c) Subject to Section 1510, any dividends or other distributions
held for or owing to a person at the time the stock or other security
to which they attach escheats to this state also escheat to this
state as of the same time.
(d) With respect to any interest that may escheat pursuant to
subdivision (b), the business association shall make reasonable
efforts to notify the owner by mail or, if the customer has
consented to electronic notifications, electronical ly,
that the owner's interest in the business association will
escheat to the state. The notice shall be given not less than 6 nor
more than 12 months before the time the interest in the business
association becomes reportable to the Controller in accordance with
this chapter. The face of the notice shall contain a heading centered
at the top that reads as follows: "THE STATE OF CALIFORNIA REQUIRES
US TO NOTIFY YOU THAT YOUR UNCLAIMED PROPERTY MAY BE TRANSFERRED TO
THE STATE IF YOU DO NOT CONTACT US," or substantially similar
language. The notice required by this subdivision shall specify the
time that the interest will escheat and the effects of escheat,
including the necessity for filing a claim for the return of the
interest. The notice required by this section shall, in bold or in a
font a minimum of two points larger than the rest of the notice, (1)
specify that since the date of last activity, or for the last two
years, there has been no customer activity on the deposit, account,
shares, or other interest; (2) identify the deposit, account, shares,
or other interest by number or identifier; (3) indicate that the
deposit, account, shares, or other interest is in danger of
escheating to the state; and (4) specify that the California
Unclaimed Property Law requires banks, banking organizations, and
financial organizations to transfer funds of a deposit, account,
shares, or other interest if it has been inactive for three years. It
shall also include a form, as prescribed by the Controller, by which
the owner may confirm the owner's current address. If that form is
filled out, signed by the owner, and returned to the holder, it shall
be deemed that the business association knows the location of the
owner.
(e) In addition to the notice required pursuant to subdivision
(d), the holder may give additional notice as described in
subdivision (d) at any time between the date of last activity by, or
communication with, the owner and the date the holder transfers the
deposit, shares, or other interest to the Controller.
SEC. 4. SEC. 5. Section 1520 of the
Code of Civil Procedure is amended to read:
1520. (a) All tangible personal property located in this state
and, subject to Section 1510, all intangible personal property,
except property of the classes mentioned in Sections 1511, 1513,
1514, 1515, 1515.5, 1516, 1517, 1518, 1519, and 1521, including any
income or increment thereon and deducting any lawful charges, that is
held or owing in the ordinary course of the holder's business and
has remained unclaimed by the owner for more than three years after
it became payable or distributable escheats to this state.
(b) Except as provided in subdivision (a) of Section 1513.5,
subdivision (b) of Section 1514, and subdivision (d) of Section 1516,
if the holder has in its records an address for the apparent owner
of property valued at fifty dollars ($50) or more, which the holder's
records do not disclose to be inaccurate, the holder shall make
reasonable efforts to notify the owner by mail or, if the
customer has consented to electronic notifications, electronically,
that the owner's property will escheat to the state pursuant to
this chapter. The notice shall be mailed not less than six nor more
than 12 months before the time when the owner's property held by the
business becomes reportable to the Controller in accordance with this
chapter. The face of the notice shall contain a heading centered at
the top that reads as follows: "THE STATE OF CALIFORNIA REQUIRES US
TO NOTIFY YOU THAT YOUR UNCLAIMED PROPERTY MAY BE TRANSFERRED TO THE
STATE IF YOU DO NOT CONTACT US," or substantially similar language.
The notice required by this subdivision shall specify the time when
the property will escheat and the effects of escheat, including the
need to file a claim in order for the owner's property to be returned
to the owner. The notice required by this section shall, in bold or
in a font a minimum of two points larger than the rest of the notice,
(1) specify that since the date of last activity, or for the last
two years, there has been no customer activity on the deposit,
account, shares, or other interest; (2) identify the deposit,
account, shares, or other interest by number or identifier; (3)
indicate that the deposit, account, shares, or other interest is in
danger of escheating to the state; and (4) specify that the
California Unclaimed Property Law requires banks, banking
organizations, and financial organizations to transfer funds of a
deposit, account, shares, or other interest if it has been inactive
for three years. It shall also include a form, as prescribed by the
Controller, by which the owner may confirm the owner's current
address. If that form is filled out, signed by the owner, and
returned to the holder, it shall be deemed that the account, or other
device in which the owner's property is being held, remains
currently active and recommences the escheat period.
(c) In addition to the notice required pursuant to subdivision
(b), the holder may give additional notice as described in
subdivision (b) at any time between the date of last activity by, or
communication with, the owner and the date the holder transfers the
property to the Controller.
(d) For purposes of this section, "lawful charges" means charges
which are specifically authorized by statute, other than the
Unclaimed Property Law, or by a valid, enforceable contract.
SEC. 5. SEC. 6. Section
1532 of the Code of Civil Procedure is amended to read:
1532. (a) Every person filing a report as provided by Section
1530 shall, no sooner than seven months and no later than seven
months and 15 days after the final date for filing the report, pay or
deliver to the Controller all escheated property specified in the
report. Any payment of unclaimed cash in an amount of at least twenty
thousand dollars ($20,000) shall be made by electronic funds
transfer pursuant to regulations adopted by the Controller. The
Controller may postpone the date for payment or delivery of the
property, and the date for any report required by subdivision (b),
upon his or her own motion or upon written request by any person
required to pay or deliver the property or file a report as required
by this section.
(b) If a person establishes his or her right to receive any
property specified in the report to the satisfaction of the holder
before that property has been delivered to the Controller, or it
appears that, for any other reason, the property may not be subject
to escheat under this chapter, the holder shall not pay or deliver
the property to the Controller but shall instead file a report with
the Controller, on a form and in a format prescribed or approved by
the Controller, containing information pertaining to the property not
subject to escheat.
(c) Any property not paid or delivered pursuant to subdivision (b)
that is later determined by the holder to be subject to escheat
under this chapter shall not be subject to the interest provision of
Section 1577.
(d) The holder of any interest under subdivision (b) of Section
1516 shall deliver a duplicate certificate to the Controller or shall
register the securities in uncertificated form in the name of the
Controller. Upon delivering a duplicate certificate or providing
evidence of registration of the securities in uncertificated form to
the Controller, the holder, any transfer agent, registrar, or other
person acting for or on behalf of the holder in executing or
delivering the duplicate certificate or registering the
uncertificated securities, shall be relieved from all liability of
every kind to any person including, but not limited to, any person
acquiring the original certificate or the duplicate of the
certificate issued to the Controller for any losses or damages
resulting to that person by the issuance and delivery to the
Controller of the duplicate certificate or the registration of the
uncertificated securities to the Controller.
(e) Payment of any intangible property to the Controller shall be
made at the office of the Controller in Sacramento or at another
location as the Controller by regulation may designate. Except as
otherwise agreed by the Controller and the holder, tangible personal
property shall be delivered to the Controller at the place where it
is held.
(f) Payment is deemed complete on the date the electronic funds
transfer is initiated if the settlement to the state's demand account
occurs on or before the banking day following the date the transfer
is initiated. If the settlement to the state's demand account does
not occur on or before the banking day following the date the
transfer is initiated, payment is deemed to occur on the date
settlement occurs.
(g) Any person required to pay cash by electronic funds transfer
who makes the payment by means other than an authorized electronic
funds transfer shall be liable for a civil penalty of 2 percent of
the amount of the payment that is due pursuant to this section, in
addition to any other penalty provided by law. Penalties are due at
the time of payment. If the Controller finds that a holder's failure
to make payment by an appropriate electronic funds transfer in
accordance with the Controller's procedures is due to reasonable
cause and circumstances beyond the holder's control, and occurred
notwithstanding the exercise of ordinary care and in the absence of
willful neglect, that holder shall be relieved of the penalties.
(h) An electronic funds transfer shall be accomplished by an
automated clearinghouse debit, an automated clearinghouse credit, a
Federal Reserve Wire Transfer (Fedwire), or by an international funds
transfer. Banking costs incurred for the automated clearinghouse
debit transaction by the holder shall be paid by the state. Banking
costs incurred by the state for the automated clearinghouse credit
transaction may be paid by the holder originating the credit. Banking
costs incurred for the Fedwire transaction charged to the holder and
the state shall be paid by the person originating the transaction.
Banking costs charged to the holder and to the state for an
international funds transfer may be charged to the holder.
(i) For purposes of this section:
(1) "Electronic funds transfer" means any transfer of funds, other
than a transaction originated by check, draft, or similar paper
instrument, that is initiated through an electronic terminal,
telephonic instrument, modem, computer, or magnetic tape, so as to
order, instruct, or authorize a financial institution to credit or
debit an account.
(2) "Automated clearinghouse" means any federal reserve bank, or
an organization established by agreement with the National Automated
Clearing House Association, that operates as a clearinghouse for
transmitting or receiving entries between banks or bank accounts and
that authorizes an electronic transfer of funds between those banks
or bank accounts.
(3) "Automated clearinghouse debit" means a transaction in which
the state, through its designated depository bank, originates an
automated clearinghouse transaction debiting the holder's bank
account and crediting the state's bank account for the amount of
payment.
(4) "Automated clearinghouse credit" means an automated
clearinghouse transaction in which the holder, through its own bank,
originates an entry crediting the state's bank account and debiting
the holder's bank account.
(5) "Fedwire" means any transaction originated by the holder and
utilizing the national electronic payment system to transfer funds
through federal reserve banks, pursuant to which the holder debits
its own bank account and credits the state's bank account.
(6) "International funds transfer" means any transaction
originated by the holder and utilizing the international electronic
payment system to transfer funds, pursuant to which the holder debits
its own bank account, and credits the funds to a United States bank
that credits the Unclaimed Property Fund.
SEC. 6. SEC. 7. Section 1540 of the
Code of Civil Procedure is amended to read:
1540. (a) Any person, excluding another state, who claims an
interest in property paid or delivered to the Controller under this
chapter may file a claim to the property or to the net proceeds from
its sale. The claim shall be on a form prescribed by the Controller
and shall be verified by the claimant.
(b) The Controller shall consider each claim within 180 days after
it is filed and may hold a hearing and receive evidence. The
Controller shall give written notice to the claimant if he or she
denies the claim in whole or in part. The notice may be given by
mailing it to the address, if any, stated in the claim as the address
to which notices are to be sent. If no address is stated in the
claim, the notice may be mailed to the address, if any, of the
claimant as stated in the claim. No notice of denial need be given if
the claim fails to state either an address to which notices are to
be sent or an address of the claimant.
(c) (1) The Controller shall add interest at the rate of 5 percent
per year or the bond equivalent rate of 13-week United States
Treasury bills, whichever is lower, to the amount of any claim paid
to the owner under this section for the period the property was on
deposit in the Unclaimed Property Fund. No interest shall be payable
for any period prior to January 1, 1977. Any interest required to be
paid by the state pursuant to this section shall be computed as
simple interest, not as compound interest.
(2) For purposes of this section, the bond equivalent rate of
13-week United States Treasury bills shall be defined in accordance
with the following criteria:
(A) The bond equivalent rate of 13-week United States Treasury
bills established at the first auction held during the month of
January shall apply for the following July 1 to December 31,
inclusive.
(B) The bond equivalent rate of 13-week United States Treasury
bills established at the first auction held during the month of July
shall apply for the following January 1 to June 30, inclusive.
(d) A holder who pays to the owner property that has escheated and
been remitted to the state and that, if claimed from the Controller,
would be subject to subdivision (c) shall add interest as provided
in subdivision (c). If interest is added, that interest shall be
repaid to the holder by the Controller in the same manner as the
principal.
(e) For the purposes of this section, "owner" means the person who
had legal right to the property prior to its escheat, his or her
heirs, his or her legal representative, or a public administrator
acting pursuant to the authority granted in Sections 7660 and 7661 of
the Probate Code.
(f) Following a public hearing, the Controller shall adopt
guidelines and forms that shall provide specific instructions to
assist owners in filing claims pursuant to this article.
SEC. 7. SEC. 8. Section 1560 of the
Code of Civil Procedure is amended to read:
1560. (a) Upon the payment or delivery of escheated property to
the Controller, the state shall assume custody and shall be
responsible for the safekeeping of the property. Any person who pays
or delivers escheated property to the Controller under this chapter
and who, prior to escheat, if the person's records contain an address
for the apparent owner, has made reasonable efforts to notify the
owner by mail or, when the owner has consented to electronic
notifications, electronically, as required by Sections 1513.5, 1514,
1516, and 1520, that the customer's property, deposit, account,
shares, or other interest will escheat to the state, is relieved of
all liability to the extent of the value of the property so paid or
delivered for any claim which then exists or which thereafter may
arise or be made in respect to the property. Property removed from a
safe deposit box or other safekeeping repository shall be received by
the Controller subject to any valid lien of the holder for rent and
other charges, such rent and other charges to be paid out of the
proceeds remaining after the Controller has deducted therefrom his
selling cost.
(b) Any holder who has paid moneys to the State Controller
pursuant to this chapter may make payment to any person appearing to
such holder to be entitled thereto, and upon filing proof of such
payment and proof that the payee was entitled thereto, the Controller
shall forthwith reimburse the holder for the payment without
deduction of any fee or other charges. Where reimbursement is sought
for a payment made on a negotiable instrument (including a travelers
check or money order), the holder shall be reimbursed under this
subdivision upon filing proof that the instrument was duly presented
to him and that payment was made thereon to a person who appeared to
the holder to be entitled to payment.
(c) The holder shall be reimbursed under this section even if he
made the payment to a person whose claim against him was barred
because of the expiration of any such period of time as those
described in Section 1570.
(d) Any holder who has delivered personal property, including a
certificate of any interest in a business association, to the
Controller pursuant to this chapter may reclaim such personal
property if still in the possession of the Controller without payment
of any fee or other charges upon filing proof that the owner thereof
has claimed such personal property from such holder. The Controller
may, in his discretion, accept an affidavit of the holder stating the
facts that entitle the holder to reimbursement under this
subdivision as sufficient proof for the purposes of this subdivision.
SEC. 8. Section 1563 of the Code of Civil
Procedure is amended to read:
1563. (a) Except as provided in subdivisions (b) and (c), all
escheated property delivered to the Controller under this chapter
shall be sold by the Controller to the highest bidder at public sale
in whatever city in the state affords in his or her judgment the most
favorable market for the property involved, or the Controller may
conduct the sale by electronic media, including, but not limited to,
the Internet, if in his or her judgment it is cost effective to
conduct the sale of the property involved in that manner. However, no
sale shall be made pursuant to this subdivision until 18 months
after the final date for filing the report required by Section 1530.
The Controller may decline the highest bid and reoffer the property
for sale if he or she considers the price bid insufficient. The
Controller need not offer any property for sale if, in his or her
opinion, the probable cost of sale exceeds the value of the property.
Any sale of escheated property held under this section shall be
preceded by a single publication of notice thereof, at least one week
in advance of sale, in an English language newspaper of general
circulation in the county where the property is to be sold.
(b) Securities listed on an established stock exchange shall be
sold at the prevailing prices on that exchange. Other securities may
be sold over the counter at prevailing prices or, with prior approval
of the California Victim Compensation and Government Claims Board,
by any other method that the Controller may determine to be
advisable. These securities shall be sold by the Controller no sooner
than 18 months, but no later than 20 months, after the final date
for filing the report required by Section 1530. If securities
delivered to the Controller by a holder of the securities remain in
the custody of the Controller, a person making a valid claim for
those securities under this chapter shall be entitled to receive the
securities from the Controller. If the securities have been sold, the
person shall be entitled to receive the net proceeds received by the
Controller from the sale of the securities and shall not be entitled
to receive any appreciation in the market value of the securities
occurring after the sale by the Controller. United States government
savings bonds and United States war bonds shall be presented to the
United States for payment. Subdivision (a) does not apply to the
property described in this subdivision.
(c) (1) All escheated property consisting of military awards,
decorations, equipment, artifacts, memorabilia, documents,
photographs, films, literature, and any other item relating to the
military history of California and Californians that is delivered to
the Controller is exempt from subdivision (a) and shall be held in
trust for the Controller at the California State Military Museum and
Resource Center. All escheated property held in trust pursuant to
this subdivision is subject to the applicable regulations of the
United States Army governing Army museum activities as described in
Section 179 of the Military and Veterans Code. Any person claiming an
interest in the escheated property may file a claim to the property
pursuant to Article 4 (commencing with Section 1540).
(2) The California State Military Museum and Resource Center shall
be responsible for the costs of storage and maintenance of escheated
property delivered by the Controller under this subdivision.
(d) The purchaser at any sale conducted by the Controller pursuant
to this chapter shall receive title to the property purchased, free
from all claims of the owner or prior holder thereof and of all
persons claiming through or under them. The Controller shall execute
all documents necessary to complete the transfer of title.
SEC. 9. Section 1565 of the Code of Civil Procedure is amended to
read:
1565. Any property delivered to the Controller pursuant to this
chapter that has no apparent commercial value shall be retained by
the Controller for a period of not less than seven years from the
date the property is delivered to the Controller. If the Controller
determines that any property delivered to him or her pursuant to this
chapter has no apparent commercial value, he or she may at any time
thereafter destroy or otherwise dispose of the property, and in that
event no action or proceeding shall be brought or maintained against
the state or any officer thereof, or against the holder for, or on
account of any action taken by, the Controller pursuant to this
chapter with respect to the property.
SEC. 10. Section 1577 of the Code of Civil Procedure is amended to
read:
1577. In addition to any damages, penalties, or fines for which a
person may be liable under other provisions of law, any person who
fails to file a report in the time and manner required by Section
1530, or who otherwise fails to report, pay, or deliver unclaimed
property within the time prescribed by this chapter, unless that
failure is due to reasonable cause, shall pay to the Controller
interest at the rate of 12 percent per annum on that property or
value thereof from the date the property should have been reported,
paid, or delivered.