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AB-2209 Unclaimed property: time frames.(2017-2018)

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Date Published: 02/12/2018 09:00 PM
AB2209:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 2209


Introduced by Assembly Member Choi

February 12, 2018


An act to amend Sections 1513 and 1513.5 of the Code of Civil Procedure, relating to unclaimed property.


LEGISLATIVE COUNSEL'S DIGEST


AB 2209, as introduced, Choi. Unclaimed property: time frames.
The Unclaimed Property Law (UPL) prescribes the circumstances under which unclaimed personal property held by a banking or financial organization, business association, or other holder of personal property escheats to the state. The UPL specifies that any demand, savings, or matured time deposit, or account subject to a negotiable order of withdrawal, made with a banking organization escheats to the state if the owner, for more than 3 years, has not had specified activity on the account, except as specified.
This bill would extend this 3-year period to 5 years.
The UPL requires a banking or financial organization, if it has in its records an address for the apparent owner, which the records do not disclose to be inaccurate, to make reasonable efforts to notify by mail any owner that the owner deposit, account, shares, or other interest in the banking or financial organization will escheat to the state, as specified. Existing law requires the notice be given either not less than 2 years nor more than 2 1/2 years after the last activity by or with the owner, with respect to the account, deposit, shares, or other interest, or not less than 6 nor more than 12 months before the time the account, deposit, shares, or other interest becomes reportable to the Controller, as specified.
This bill would extend the initial time frame, described above, of 2 years and nor more than 2 1/2 years after the last activity, to not less than 3 nor more than 3 1/2 years.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   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:
(1) (A) Except as provided in 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, if the owner, for more than three five years, has not done any of the following:
(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.
(ii) Corresponded electronically or in writing with the banking organization concerning the deposit.
(iii) Otherwise indicated an interest in the deposit as evidenced by a memorandum or other record on file with the banking organization.
(B) A deposit or account shall not, however, escheat to the state if, during the previous three five years, the owner has owned another deposit or account with the banking organization or the owner has owned an individual retirement account or funds held by the banking organization under a retirement plan for self-employed individuals or a similar account or plan established pursuant to the internal revenue laws of the United States or the laws of this state, as described in paragraph (6), and, with respect to that deposit, account, or plan, the owner has done any of the acts described in clause (i), (ii), or (iii) 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, account, or plan are regularly sent, with regard to the deposit or account that would otherwise escheat under subparagraph (A). For purposes of this subparagraph, “communications” includes account statements or statements required under the internal revenue laws of the United States.
(C) No banking organization may discontinue any interest or dividends on any savings deposit because of the inactivity contemplated by this section.
(2) (A) Except as provided in 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, if the owner, for more than three five years, has not done any of the following:
(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.
(ii) Corresponded electronically or in writing with the financial organization concerning the funds or deposit.
(iii) Otherwise indicated an interest in the funds or deposit as evidenced by a memorandum or other record on file with the financial organization.
(B) A deposit or account shall not, however, escheat to the state if, during the previous three five years, the owner has owned another deposit or account with the financial organization or the owner has owned an individual retirement account or funds held by the financial organization under a retirement plan for self-employed individuals or a similar account or plan established pursuant to the internal revenue laws of the United States or the laws of this state, as described in paragraph (6), and, with respect to that deposit, account, or plan, the owner has done any of the acts described in clause (i), (ii), or (iii) 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, account, or plan are regularly sent, with regard to the deposit or account that would otherwise escheat under subparagraph (A). For purposes of this subparagraph, “communications” includes account statements or statements required under the internal revenue laws of the United States.
(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.
(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, if 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.
(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, cashier’s check, teller’s check, or certified check, that has been outstanding for more than three five years from the date it was payable, or from the date of its issuance if payable on demand, if the owner, for more than three five 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.
(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, if 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:
(A) It is uniformly applied to all of the issuer’s money orders.
(B) It is clearly disclosed to the purchaser at the time of purchase and to the recipient of the money order.
(C) It does not begin to accrue until three five years after the purchase date, and it stops accruing after the value of the money order escheats.
(D) It is permitted by contract between the issuer and the purchaser.
(E) It does not exceed 25 cents ($0.25) per month or the aggregate amount of twenty-one dollars ($21).
(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, if the owner, for more than three five years after the funds become payable or distributable, has not done any of the following:
(i) Increased or decreased the principal.
(ii) Accepted payment of principal or income.
(iii) Corresponded electronically or in writing concerning the property or otherwise indicated an interest.
(B) Funds held by a business association in an individual retirement account or under a retirement plan for self-employed individuals or a similar account or plan created pursuant to the internal revenue laws of the United States or the laws of this state shall not escheat to the state if, during the previous three five years, the owner has owned another such account, plan, or any other deposit or account with the business association and, with respect to that deposit, account, or plan, the owner has done any of the acts described in clause (i), (ii), or (iii) of subparagraph (A), and the business association has communicated electronically or in writing with the owner, at the address to which communications regarding that deposit, account, or plan are regularly sent, with regard to the account or plan that would otherwise escheat under subparagraph (A). For purposes of this subparagraph, “communications” includes account statements or statements required under the internal revenue laws of the United States.
(C) These funds are not payable or distributable within the meaning of this subdivision unless either of the following is true:
(i) Under the terms of the account or plan, distribution of all or a part of the funds would then be mandatory.
(ii) For an account or plan not subject to mandatory distribution requirement under the internal revenue laws of the United States or the laws of this state, the owner has attained 701/2 years of age.
(7) Any wages or salaries that have remained unclaimed by the owner for more than one year after the wages or salaries become payable.
(b) For purposes of this section, “service charges” means service charges imposed because of the inactivity contemplated by this section.
(c) A holder shall, commencing on or before January 1, 2018, regard the following transactions that are initiated electronically and are reflected in the books and records of the banking or financial organization as evidence that an owner has increased or decreased the amount of the funds or deposit in an account, for purposes of paragraphs (1) and (2) of subdivision (a):
(1) A single or recurring debit transaction authorized by the owner.
(2) A single or recurring credit transaction authorized by the owner
(3) Recurring transactions authorized by the owner that represent payroll deposits or deductions.
(4) Recurring credits authorized by the owner or a responsible party that represent the deposit of any federal benefits, including social security benefits, veterans’ benefits, and pension payments.

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 any owner by mail or, if the owner has consented to electronic notice, electronically, that the owner’s deposit, account, shares, or other interest in the banking or financial organization will escheat to the state pursuant to clause (i), (ii), or (iii) of subparagraph (A) of paragraph (1), (2), or (6) of subdivision (a) of Section 1513. The holder shall give notice either:
(1) Not less than two years three nor more than two three 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 banking or financial organization.
(2) Not less than 6 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 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 boldface type or in a font a minimum of two points larger than the rest of the notice, exclusive of the heading, (1) specify that since the date of last activity, or for the last two three years, there has been no owner activity on the deposit, account, shares, or other interest; (2) identify the deposit, account, shares, or other interest by number or identifier, which need not exceed four digits; (3) indicate that the deposit, account, shares, or other interest is in danger of escheating to the state; and (4) specify that the Unclaimed Property Law requires banking and financial organizations to transfer funds of a deposit, account, shares, or other interest if it has been inactive for three five years. It shall also include a form, as prescribed by the Controller, by which the owner may declare an intention to maintain the deposit, account, shares, or other interest. If that form is filled out, signed by the owner, and returned to the banking or financial organization, it shall satisfy the requirement of clause (iii) of subparagraph (A) of paragraph (1), clause (iii) of subparagraph (A) of paragraph (2), or clause (iii) of subparagraph (A) of paragraph (6) of subdivision (a) of Section 1513. In lieu of returning the form, the banking or financial organization may provide a telephone number or other electronic means to enable the owner to contact that organization. The contact, as evidenced by a memorandum or other record on file with the banking or financial organization, shall satisfy the requirement of clause (iii) of subparagraph (A) of paragraph (1), clause (iii) of subparagraph (A) of paragraph (2), or clause (iii) of subparagraph (A) of paragraph (6) of subdivision (a) of Section 1513. If the deposit, account, shares, or other interest has a value greater than two dollars ($2), 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 or electronically sending 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, except as provided in subdivision (b), 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 appropriate state if no activity occurs in the account within the time period specified by state law. If the person opening the account has consented to electronic notice, that notice may be provided electronically.