ESCHEATS: LOCATORS

House Bill 5339 as introduced

Sponsor:  Rep. Michael Webber

House Bill 5340 as introduced

Sponsor:  Rep. Wendell L. Byrd

Committee:  Regulatory Reform

Complete to 2-24-20

SUMMARY:

House Bills 5339 and 5340 would amend provisions of the Uniform Unclaimed Property Act that deal with locators of escheated property. Taken together, the bills would do all of the following:

·         Allow the state to provide all unclaimed property account information to a locator regardless of when the property was turned over to the state and regardless of its value.

·         Provide a $100 cap on the fee for a request for that information.

·         Require the state to distribute unclaimed property to a locator if the owner entered into a written agreement with the locator to claim that unclaimed property on the owner’s behalf.

·          Require certain information to be included in an agreement to compensate a locator for recovering unclaimed property or for selling unclaimed property to a locator.

 

Locator refers to a person who, for compensation, locates owners of unclaimed property and enters into a written agreement with an owner to document entitlement to property and to locate, deliver, recover, or claim property presumed abandoned or assist in locating, delivering, recovering, or claiming such property. A locator must be registered with the Department of Treasury under the act.

Under the act, generally speaking, property that remains unclaimed or dormant for a certain number of years, as provided by the act, is transferred to the state (that is, “escheated”). Unclaimed property or its equivalent value is maintained by the state for property owners in perpetuity; owners or heirs always have the right to claim it.

House Bill 5339

Currently, section 36a of the act allows the state treasurer[1] to sell or otherwise provide information to a locator for unclaimed accounts that have remained unclaimed for 24 months or more after being delivered or paid to the state treasurer, if the value of the unclaimed property is $10,000 or more.

The bill would delete this provision and would instead require the state treasurer, upon written request, to provide all unclaimed property account information described in section 36a to a locator for all unclaimed accounts described in section 20 of the act. The bill would prohibit the state treasurer from charging more than $100 for each request.

Currently, the unclaimed property account information must be provided in an electronic searchable format and may include the apparent owner’s name; the apparent owner’s last known address, as reported by the holder of the property; the relationship code, if any;[2] and the type, amount, and cash value of property.

Under the bill, information would have to be provided in a searchable digital or electronic format and would have to include all of the following:

·         The name of the apparent owner or owners.

·         The complete last known address of the apparent owner(s), as reported by the holder.

·         The relationship code, if any.

·         The type of property.

·         The cash value of the property if other than cash and the number of shares or items if the property is a security or a mutual fund share, including the exchange ticker symbol or fund name, if reported.

·         The year the property was reported to the state treasurer.

·         The name and contact information of the holder.

·         A general description of the safe deposit box contents and liquidation amount, if applicable.

In addition, under the bill, if an owner had entered into a written agreement that authorized a registered locator to claim the unclaimed property on the owner’s behalf, or if the owner had sold the right to claim the unclaimed property to a locator, the state treasurer would have to distribute the property or money in accordance with the written agreement. The written agreement would have to be executed by the owner and filed with the state treasurer.

MCL 567.256a

House Bill 5340

The act currently provides that an agreement to pay compensation to recover or assist in the recovery of property that is made within 24 months after the property has been delivered or paid to the state treasurer is unenforceable. An agreement between a locator and an apparent owner of unclaimed property is subject to that provision.

The bill would delete this provision and instead would require an agreement signed by an owner to compensate a locator to recover or to sell unclaimed property to a locator to be in writing in at least 10-point font and to include all of the following:

·         The unclaimed property account number.

·         The aggregate estimated value of the unclaimed property accounts being claimed before and after deduction of compensation and costs, if known.

·         A description of the service to be provided.

In addition, if the unclaimed property was being purchased by a locator, the agreement would have to include the net amount to be paid to the seller.

An electronically signed agreement would be considered original for all purposes under the act.

MCL 567.256

FISCAL IMPACT:

House Bills 5339 and 5340 would have an unknown net fiscal impact on the Department of Treasury and would likely reduce available general fund revenue by an unknown amount. The department would be required to provide account information for all Treasury held accounts to locators; the department currently has the discretion to provide account information on a much smaller subset of accounts (those in the possession of the department for two years and exceeding $10,000 in unclaimed property). In addition to broadening the accounts subject to locator requests to all unclaimed accounts, HB 5339 would likely lengthen the claims process by requiring additional information to be released to the locator for each account in the request that subsequently must be verified by the department when the claimant makes a claim. Therefore, administrative costs, including fraud detection, would increase under the provisions of the bill. However, the magnitude of the costs is unknown. It is also unknown how many locators would register and pay the $1,200 fee used to offset the costs of registering and monitoring unclaimed property locators.

HB 5339 would cap the amount the department could charge for each request at $100, which would have an unknown impact on total fee revenues collected by the department. Any fiscal impact would be directly related to the number and size of requests compared to current law. It is uncertain whether the locator registration fee and request fee sufficiently offset the projected increased costs.

Coupled with the changes in HB 5340, the bills also would include downside risks for general fund revenue due to increased unclaimed property being claimed either by individual claimants or locators purchasing unclaimed property from claimants, assuming the property would not have been claimed but for the changes provided in the bills. Unclaimed property is deposited in the general fund under statute. Because the bill would subject all unclaimed property to locator requests, and not just a subset of accounts exceeding $10,000, the revenue impact could be significant.

                                                                                         Legislative Analyst:   Susan Stutzky

                                                                                                 Fiscal Analyst:   Ben Gielczyk

■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.

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