BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2011-2012 Regular Session
AB 1634 (Lowenthal)
As Amended March 22, 2012
Hearing Date: June 12, 2012
Fiscal: No
Urgency: No
BCP
SUBJECT
Unclaimed Property
DESCRIPTION
This bill would provide that any solicitation made to the owner
of escheated property to locate, deliver, recover, or assist in
the recovery of that property shall be in writing, disclose the
nature and value of the property and the name, current mailing
address, and telephone number or Internet Web site of the person
or entity in possession of the property on the front page of the
solicitation in at least a 12-point type.
The bill would provide that an agreement to recover escheated
property is not valid unless the other party complied with those
solicitations requirements.
BACKGROUND
The Unclaimed Property Law (UPL), enacted in 1958, establishes
procedures to be followed when property goes unclaimed,
generally for a period of three years, and escheats to the
state. Escheated property means the state has custody of the
property in perpetuity, until the owner claims the property. The
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 has dual objectives: (1) to reunite owners with
(more)
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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, supra, at 74; Douglas
Aircraft Co. v. Cranston (1962) 58 Cal.2d 462, 463.) The
state, through the Controller, acts as the protector of the
rights of the true owner. (Bank of America, supra, at 74.)
Under existing law, the holder must annually report on unclaimed
property and turn the property over to the Controller. (Code
Civ. Proc. Secs. 1530, 1532.) 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, and to publish a notice 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 public Web site where individuals may
discover whether or not the state is holding any of their funds
or property, and may submit claims to recover the funds or
property.
Under existing law, agreements between the owner of property and
an investigator to recover escheated property are invalid unless
specified requirements are met, including that the agreement
disclose the entity in possession of the property. This bill,
sponsored by the State Controller, would additionally require
solicitations to include specified information about the
property and the person or entity in possession of the property.
CHANGES TO EXISTING LAW
Existing law , the Unclaimed Property Law, requires that every
person holding funds or other property escheated to the state
must report specific information to the Controller, including
the last known address of each person appearing from records to
be the owner of any property with a value of at least $50 that
has escheated under the UPL, as specified. (Code Civ. Proc.
Sec. 1530.) The Controller is required to publish a publish
notice within one year after payment or delivery of the
escheated property, as specified. (Code Civ. Proc. Sec. 1531.)
Existing law states that no agreement to locate, deliver,
recover, or assist in the recovery of escheated property is
valid if it is entered into between the date the above report is
filed with the Controller and the publication of the notice.
Such an agreement is valid if made after publication of the
notice if the fee or compensation agreed upon is not more than
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10 percent of the recoverable property and the agreement is in
writing and signed by the owner after disclosure of the nature
and value of the property and the name and address of the person
or entity in possession of the property. (Code Civ. Proc. Sec.
1582.)
This bill would provide that any solicitation made to locate,
delivery, recover, or assist in the recovery of property
reported to the Controller must be in writing, and shall
disclose the nature and value of the property and the name,
current mailing address, and telephone number or Internet Web
site of the person or entity in possession of the property on
the front page of the solicitation in at least a 12-point type.
This bill would provide that, in addition to the above existing
requirements, any agreement to locate, deliver, recover, or
assist in the recovery of escheated property that is made after
publication of the notice is valid only if any solicitation made
to the owner by the other party to the agreement complies with
the above requirements.
COMMENT
1. Stated need for the bill
According to the author:
Currently, when financial property (e.g. bank accounts,
stocks, etc) in California has no activity or contact with
the owner for three years, the property holder is required
to forward it to the State Controller's Office�(SCO)]. The
�SCO] then attempts to find the owner or heir and return the
property. Some investigators purchase the data of the
property the �SCO] holds and send solicitations to owners to
retrieve their lost property for them for a fee.
While investigator contracts are legally required to
identify where the property is being held, their
solicitations are under no such requirement. Investigator
solicitations may not mention the description of the
property held or that it is held by the �SCO]. When a
property owner responds to the solicitation and receives a
contract, they may sign the contract without reading that
their property is being held by the �SCO]. Without this
notice, the property owner doesn't know they have the option
to reclaim their property themselves at no charge. In
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addition, fewer property owners may respond to the
solicitations because they are unsure if the solicitations
are legitimate or a scam.
AB 1634 remedies this by requiring investigators to include
the nature, value and location of the property described on
their solicitations to return the property to its owner.
The Congress of California Seniors, in support, further
states:
Solicitation letters from investigators sometimes upset
claimants who may worry that if they don't hire the
investigator, their money or property will not be returned
to them. AB 1634 clarifies this matter by requiring that
solicitation letters state simply where they can retrieve
their property.
2. Solicitation disclosures may allow individuals to recovery
property at no charge
This bill seeks to further inform people about options for
retrieving their property that has escheated to the state, which
may include locating the property in the SCO's free online
database. The SCO's Web site notes that:
Owners or heirs can search for their property directly on
the �SCO's] Web site and file a claim for free. Possible
ownership may be indicated if the information you provide
results in a match. It is important to remember that many
people have the same name, so the property listed may not
necessarily be yours. We will be able to determine your
ownership with the documentation that you provide when you
send in the claim.
While filing a claim directly with the SCO is free, existing law
permits investigators to charge a fee of up to 10 percent of the
value of the property for the location, delivery, and recovery
of that property. (Code Civ. Proc. Sec. 1582.) Under existing
law, agreements with those investigators (sometimes referred to
as Asset Locators or Heir Finders) must be in writing and
include a disclosure of the nature and value of the property and
the name and address of the person or entity in possession of
the property. (Id.) This bill would additionally require any
solicitation made to locate, deliver, recover, or assist in the
recovery of escheated property to be in writing and similarly
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disclose the nature and value of the property, and the name,
current mailing address and telephone number or Internet Web
site of the person or entity in possession of the property on
the front page of the solicitation in at least 12-point type.
Any agreement to recover that property would only be valid if
any solicitation made to the owner by the other party to the
agreement (presumably an investigator) complied with those
requirements. The SCO, in support, further notes that:
My office frequently receives questions from the public
regarding solicitations that they receive from heir finders
or investigators offering to help them claim their property
for a fee. Heir finders or investigators may charge up to
10 percent of the value of the property that they recover.
Many property owners are unaware that the property is being
held by the State and that they can claim the property
themselves at no cost. While heir finders or investigators
help reunite people with their property, I believe strongly
that property owners should know their options for
retrieving that property.
From a practical standpoint, any solicitation that meets the
requirements of this bill would provide an individual that has
property held by the SCO with all the information necessary to
recover that property themselves. Those individuals would then
be able to choose whether to recover the property themselves,
for free, or to pay a fee of up to 10 percent of the value of
the property to have an investigator to perform that task. It
should be noted that the solicitation disclosure requirements
would also apply to property that has been reported but not yet
transferred to the SCO. With respect to issues relating to that
property, the sponsor notes:
The �SCO] has letters of solicitation from heir finders
offering to retrieve property that has not yet been noticed
by the SCO in the newspapers according to the law, nor
received. Those same solicitation letters state that the
heir finder will provide the service for a 20 �percent] fee.
Current law prohibits heir finders from charging fees of
over 10 �percent]. Instead of calling the contract an
agreement, heir finders are asking potential clients to sign
a Memorandum of Understanding. Of course the property owner
has no idea that such an agreement is in fact invalid.
Accordingly, this bill seeks to ensure that those
solicitations made to assist in the recovery of property
contain sufficient information about both the property and the
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entity in possession of the property.
3. Compliance
As noted above, the provisions of this bill would require
solicitations to arguably contain sufficient information for the
recipient to locate and recover the property themselves at no
charge. With respect to the enforcement of current restrictions
on investigator's contracts to recover property, the sponsor
states:
The �SCO] requires that claim packets submitted by
Investigators include a properly executed Standard
Investigator Agreement, signed and dated by the investigator
and each claimant. The agreement must include the nature,
value, and name and address of the person or entity in
possession of the property. Investigators are not paid if
the agreement does not include the required information;
however, the SCO does process the claim and the full amount
is sent to the owner. Investigators are informed that the
claim is being processed and why they are not being paid.
If a properly executed agreement is included, the SCO will
pay the Investigator the agreed upon percentage, which can
be up to 10 �percent].
Considering that compliance is essential for the disclosures to
be effective, the SCO should continue to work to ensure
compliance, to the extent possible, and to educate the public to
ensure that individuals are aware of the requirements of
existing law (and this bill should it be chaptered).
4. Opposition's arguments
Vanacore International, in opposition, argues that: "�AB 1634]
limits contracts to recover assets to 10 percent of the
recoverable assets, regardless of the process involved or costs
to recover such assets. Asset recovery firms provide a valuable
service of locating lost account owners and heirs of deceased
account owners, which supplements efforts made by the State
Controller. Instead of legislating in this area, we believe the
validity of each agreement should be decided on a case-by-case
basis under current contract law." Vanacore International
further contends that legislation is "better focused on . . .
unclaimed property reforms and streamlining processes to speed
up the payment of claims," and recommends changes to procedures
for claiming property and SCO processing of claims.
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In response, the SCO notes that "AB 1634 does not expand the 10
�percent] restriction (prior legislation enacted by SB 86).
Current law, �Code of Civil Procedure Section] 1582, already
restricts compensation to 10 �percent] or less for properties
reported under 1530. We are not expanding the category of
properties which are affected by the 10 �percent] restriction."
5. Clarifying amendment
To ensure that the requirements of this bill apply prospectively
and do not interfere with existing contracts, the following
amendment is suggested:
Suggested amendment:
On page 2, line 22, strike "Any" and insert:
On or after January 1, 2013, any
Support : Congress of California Seniors
Opposition : Vanacore International
HISTORY
Source : State Controller's Office
Related Pending Legislation : None Known
Prior Legislation : SB 495 (Fuller, Chapter 305, Statutes of
2011) made several changes to the Unclaimed Property Law to
increase the period of time the State Controller must hold
property that has been delivered to the state under the UPL.
Prior Vote :
Assembly Floor (Ayes 73, Noes 0)
Assembly Judiciary Committee (Ayes 8, Noes 0)
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