Tuesday, July 30, 2013

Delaware State Escheator Retires

According to a blog post in the Wall Street Journal's CFO Journal, Delaware State Escheator Mark Udinski has announced his retirement effective August 1.  Udinski has been the head of Delaware's unclaimed property program for the past several years, and was the director of the state's audit program prior to that.  Mr. Udinski's successor has not been announced by the Delaware Department of Finance.

Monday, July 29, 2013

Lost + Found: More Reclaim Records, Nebraska Outreach, Missouri Warnings

More States Announce Owner Reclaim Records -- Recently, we noted New York's and Missouri's announcements that they returned a record amount of property to rightful owners during the most recent fiscal year.  This week brings additional notices from Louisiana and Texas touting record returns.  Congrats to all.

Nebraska Announces Outreach Events -- Speaking of owner reunification, the Nebraska State Treasurer's Office has announced a series of events all across the state where an "unclaimed property specialist" will be available to help citizens look for their unclaimed property.  Treasury officials will
be attending the Nebraska State Fair, Harvest Husker Days, and other places.  A schedule of outreach events can be found here.

Missouri Warns of Unclaimed Property Scam -- According to a story by CBS affiliate KOAM7, Missouri State Treasurer is warning citizens about an unclaimed property scam being conducted by someone posing as an auditor from the National Association of Unclaimed Property Administrators.  While NAUPA is a real entity, it neither conducts unclaimed property audits on states' behalf, nor is it responsible for refunding money to owners (that task is undertaken by the individual states themselves).  We've said it before, we'll say it again:  if you get a communication about unclaimed property from someone posing as a state employee or representative, you should contact the state directly - using contact information available on the state's official website, not contact information provided in an unsolicited letter

Wednesday, July 24, 2013

California Asks: Who Is an "Owner"?

Unclaimed property laws, in a nutshell, generally require a "holder" of "property" belonging to an "owner" to report and remit (i.e., turn over) that property to a state government after a statutorily defined period of inactivity (known as the "dormancy period).  In many instances, the operation of these concepts is pretty straightforward:  If XYZ, Inc. has an outstanding check on its books owed to ABC Corp , and the check has remained uncashed for 3 years (or maybe 5 years, or some other period of time, depending on the state) than that items is statutorily deemed "abandoned" by ABC, and XYZ must report and remit that property to the appropriate state.

As with many seemingly simple things, nuances in the factual scenario sometimes complicate this analysis.  For example, in multi-party relationships, it is sometimes difficult to determine who is the "holder" of property with the obligation to report and remit to the state.  Other times, it is difficult to determine whether certain types of contingent or unliquidated claims are "property" at all.  Sometimes, even the concept of "owner" is ambiguous.  For example, many states define the "owner" of property as "a person who has a legal or equitable interest in property subject to the Act."  (See 1995 Uniform Act at Section 1(11)). That definition, by its express terms, might include a number of people.  For example, imagine that Bob Buyer buys a vintage car from Steve Seller and agrees to pay Steve 90% of what Bob can get for the car from a dealer of vintage cars that Bob knows.  In the meantime, Bob sells that car to a dealer in exchange for a check.  Clearly, Bob might be considered the "owner" of that check, and if it remains uncashed, the dealer may report it to the state.  But what about Steve?  Under the definition, doesn't he have at least an "equitable" interest in the property?  If the check goes unclaimed, assuming that he can prove the relationship set forth above, can Steve be considered an owner?

An appellate court in California faced a similar issue last year in a case called Weingarten Realty Investors v. Chiang, 212 Cal. App. 4th 813 (Cal. Ct. App. 2012).  In that case Weingarten was a judgment creditor (i.e., a party who was owed money as a result of winning a lawsuit) with a judgment against a company called Novadyne.  The Court in the underlying Weingarten v. Novadyne matter assigned certain unclaimed property held by California for Novadyne to Weingarten as a way to pay some of the judgment owed by Novadyne to Weingarten.  Armed with that assignment, Weingarten then petitioned the California State Controller's Office (SCO) to turn over the funds.  The SCO refused, indicating that Weingarten was not entitled to claim the property.

Weingarten brought suit and won in the trial court.  The SCO appealed that decision to the California Court of Appeal, who ultimately found in favor of Weingarten and published a written opinion on the subject.  In rejecting the SCO's argument that Weingarten was not a proper "owner" of the property, the Court focused on the broad definition of "owner" found in Section 1501 of the California Act, which includes "any person having a legal or equitable interest in property subject to this chapter."  Finding that Weingarten fell within that broad definition of owner, the Court concluded that Weingarten was entitled to claim the property.

But our story doesn't end there...

In February of this year, the California State Assembly introduced Assembly Bill 1275, which would change the definition of "owner" in the California Act to include only "the person who had legal right to the property prior to its escheat."  That bill passed the Assembly in May and the state Senate earlier this month.  While the legislation seems relatively straightforward, it could have an unintended impact on the holder community.  For example, the narrow definition of "owner" in the bill calls into question the traditional holder practice of making payment of the previously reported unclaimed property to the owner and then seeking reimbursement for the payment from the state.  Based upon that concern, and others, the Unclaimed Property Professionals' Organization sent a letter to the SCO seeking clarification concerning the new legislation.  

Friday, July 12, 2013

Lost + Found: Records in New York and Missouri, Oregon Holder Seminar

New York Sets Unclaimed Property Reunification Record . . .  -- According to an article in the Auburn Citizen, the New York State Office of Unclaimed Funds returned a record $347 million in unclaimed property during fiscal year 2012-13.  Lest anyone think that the job at OUF is complete, the same article notes that New York still has $12.5 billion in funds waiting to be claimed.

. . . As Does Missouri (Again) -- Missouri State Treasurer (and Escheatable guest) Clint Zweifel recently announced that his office also broke the state reunification record by returning more than $39 million in the past year.  The record wasn't very old - it was broken by the State Treasury last year.

Oregon Holding Holder Education Seminars -- All summer, the Oregon Department of State Lands will be hosting holder education seminars for reporters of unclaimed property.  According to the DSL's website, the half-day seminars will include an overview of the law, determining when and how to report unclaimed property, how to conduct due diligence, and more.  A complete schedule of events is available at the DSL's website.

Monday, July 8, 2013

Upcoming UPPO Events: Holders' Seminar and (Non-Delaware) VDA Seminar

The Unclaimed Property Professionals' Organization, the premiere trade group for holders of unclaimed property is holding its next Holders' Seminar on August 14-15 in Chicago, Illinois.  The Holders' Seminar features a wealth of information on unclaimed property topics, and features both "beginner" and "intermediate" educational tracks.  More information can be found on the UPPO website, here.

For those of you who can't make the trip to Chicago, on July 25th, UPPO is hosting a webinar on "VDAs: Everything but Delaware."  Although the "First-Staters" out there may be loathe to admit it, there are other states out there.  (Really, they have flags and state birds, and everything).  For those of you with questions about voluntary disclosure and amnesty arrangements in places other than Delaware, UPPO has you covered.  Registration information can be found here