California Withdraws Proposed Unclaimed Property Regulations

The California Controller proposed changes to the California administrative regulations relating to Unclaimed Property on December 2, 2011. That proposal has been withdrawn by the Controller, with the following announcement from the Controller's office.

"Pursuant to Government Code section 11347, the State Controller has decided not to proceed with the proposed amendments to California Code of Regulations, title 2, sections 1155.250, 1155.350, and 1175 (Notice File No. Z-2011-1118-05), as published in the California Regulatory Notice Register on December 2, 2011. The Controller hereby withdraws this proposed action from further consideration."

The proposed regulations would have modified forms and document retention policies. A voided check would no longer be required, as companies could provide routing and account numbers instead. Meanwhile, California regulation section 1175 currently require holders to maintain records for seven years after the property is reported or should have been reported. However, the underlying statute does not have any such record retention period, while the California Court of Appeal has said that there is no statute of limitations on the time in which the Controller may bring suit to enforce the unclaimed property statutes. (Bank of America v. Cory, (1985) 164 Cal.App.3d 66, 74-77) The Controller believed that this regulation may restrict its ability to pursue holders for the full scope of potential liabilities.

Barganier and Associates will continue to monitor the states for legislative and administrative changes that may affect client holder's compliance positions.