We spend a lot of time here at Escheatable talking about the rights, obligations, and practices of unclaimed property holders. Today, we look at the other side - unclaimed property finder firms. Generally, these firms will locate unclaimed property (from state unclaimed property databases, court records, and/or using information provided by a holder), find and contact the apparent owner, and offer to handle the reclaim process -- usually in exchange for a significant percentage of the claimed funds.
These finder firms are subject to widely differing regulation from state to state. In some states, such as Oregon, finders must be licensed by the state. In other states, there is no licensing process, but the state unclaimed property act limits the fees that can be charged. In North Carolina, for example, the Attorney General's office recently announced that it took action against a finder firm for charging finder's fees in excess of the twenty percent permitted by law.
A recent case from New Jersey involving a finder firm demonstrates that finder contracts will be thoroughly scrutinized by the courts. Haven Savings Bank v. Zanolini involved two separate contracts (the Anderson Contract and the Zanolini Contract) pursuant to which a finder firm -- Global Discoveries, Ltd. -- agreed to assist with the reclaim of surplus funds generated by a sheriff's sale. In both cases, Global contracted for a 35% share of the claimed property, the maximum amount permitted by law (see N.J.S.A. 46:30B-106). After the lower court refused to enforce either contract as written, the Appellate Division allowed Global to collect its 35% contingency fee with respect to the Anderson Contract, but not pursuant to the Zanolini Contract. In so doing, the court made clear that although it would allow the 35% fee, it would insist that such a finder contract comply with all legal requirements.
Pursuant to N.J.S.A. 46:30B-106, a finder may charge a fee of 35% if (a) the property is not yet dormant; (b) there is a signed agreement between the finder and the owner; (c) the agreement sets forth the "nature and value" of the property; and (d) the agreement sets forth the value of the "owner's share" after the property is recovered. Both the Anderson and Zanolini Contracts met the first three requirements, but the Zanolini Contract did not set forth the value of the "owner's share." The fact that the "owner's share" of the property could have been determined from the contract and a calculator was of no moment to the Appellate Division. Instead, the Appellate Division determined that Global's failure to include that information in the agreement itself "leads inexorably to the conclusion that the Zanolini contract is simply not valid under the plain terms of the statute."
Accordingly, although some state unclaimed property laws allow finders to charge substantial fees, the Haven case is a reminder that the courts will insist upon total compliance with the letter of the law.