Florida’s law regarding payouts of unclaimed property is unconstitutional, a St. Petersburg resident argued in a lawsuit filed Friday in federal court, because it doesn’t include interest payments accrued after the state receives the money.
Alieda Maron owns $26.24 worth of property that is held in custody by the state. When she claims it, the state won’t pay out any interest or dividends accrued on the funds, which she argued is a violation of the Fifth Amendment to the U.S. Constitution, which prohibits the government from taking private property for public use “without due compensation.”
“While the State has held Ms. Maron’s property in custody, pursuant to the Act, it has used the property for public purposes, including by investing the property and earning interest, and otherwise using it to fund the State’s operations and programs, thereby relieving the State from borrowing funds at market rates to satisfy its obligations,” the lawsuit states.
Maron’s lawyer, Scott Jeeves, filed the suit on her behalf as well as on the behalf of “others similar situated,” so the suit could become a class-action suit if others who own unclaimed property held by the state join her in the lawsuit.
Under Florida’s unclaimed property law, a business, bank or other entity which holds custody of an asset — such as an uncashed check, life insurance benefit or other valuable item left in a safety deposit box by someone who died — can transfer the property to the state after making attempts to reach the owner.
The Division of Unclaimed Property under the Department of Financial Services, which is overseen by Chief Financial Officer Jimmy Patronis, who is named in the lawsuit, sets up a database for the rightful owners to claim the property.
“The Department is reviewing the lawsuit. Currently, when unclaimed property is recovered by DFS on behalf of Florida residents, until claimed, it is deposited into the DOE State School Trust Fund to benefit Florida’s K-12 public schools,” DFS spokesman Devin Galetta stated in an email. “Once a claim is made to the Department, the full value is returned to the rightful owner.”
The division will sell the property that isn’t cash and then deposit the proceeds in the State School Fund to help pay for K-12 schools, after retaining $15 million for administration expenses. For the fiscal year that ended June 30, the state returned $388 million in unclaimed property and still has $3.5 billion.
Although a rightful owner of property can receive any interest or dividends that accrued before the state sells it, they aren’t entitled to any interest that could’ve accrued after the sale.
“(State law) effectively provides the State with an interest-free loan of unclaimed private property funds that the (law) directs to be co-mingled with the State’s School Fund while in the State’s custody,” the lawsuit states. “The State otherwise pays market rates to borrow money.”
The lawsuit cites a similar case that challenged Illinois’ unclaimed property laws. In that case the Seventh Circuit Court of Appeal ruled in August 2017 that a person is entitled to the interest earned on property held by the state. Illinois later settled the case and is now paying out interest on unclaimed property payments.
July 20, 2022 at 5:40 pm
I think everyone knows and signs if you go dormant your stuff goes to unclaimed
July 27, 2022 at 11:45 am
What can be done when the bank says they sent the money to Unclaimed Property @ Florida Treasury 18 months ago, the State says they never got it, and the bank can’t or won’t provide a means of tracking its whereabouts?
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