Unclaimed Property Laws Even Trip Up Government Entities
Private companies are not the only ones with the obligation to comply with unclaimed property laws. In many states, the escheat laws also apply to state, municipal, and local government entities. For example, under the Uniform Unclaimed Property Act of 1995, property held by a “court, government, governmental subdivision, agency, or instrumentality” is escheatable 1 year “after the property becomes distributable.” (Section 2(a)(11)). Just like private entity holders, government entities have an obligation to report and remit unclaimed property to the appropriate state agency, and, just like private entities, government organizations can be audited.
According to an article in the Albany Times-Union, one recent audit by the New York State Comptroller’s Office of Columbia County, New York discovered nearly $50,000 in unclaimed property that should have been, but was not, reported and remitted to the state. According to the article, most of the property came from mortgage foreclosure proceeds, abandoned bail funds, and other court deposits. This is not an isolated incident. A few years ago, we mentioned a California grand jury who made similar findings of noncompliance relating to several municipalities in California. Similarly, a review of the Philadelphia Sheriff’s Office uncovered up to $50 million that should have been reported to the state.
Both private companies and government agencies need to ensure that they have appropriate policies and procedures in place relating to unclaimed property. More importantly, they need to make sure that those policies are followed.