If you haven’t already filed your Escheat Report to the State Controller, you best get on it! The deadline for reporting is October 31st. If you’re response is What is Escheating? The answer is:
The reporting as of June 30th of each year of funds which have been dormant and unclaimed for 3 years from Date of Last Contact. These can be:
- Un-cashed checks (aka outstanding checks),
- EMD’s which neither the buyer or seller have claimed or can agree on the distribution,
- Funds held at the close of escrow to which neither the buyer or seller have provided proof of the completion of the contingency,
- Disputed funds in which one or both parties have not signed disbursement instructions
- Title refunds which were not disbursed to the rightful party or which were returned as “undeliverable”.
Each year’s escheat report, due October 31st, is for unclaimed funds with a Date of Last Contact of July 1st through June 30th.
Un-cashed checks will, in most cases, show up on your monthly reconciliation report under the listing Outstanding Checks. The date the check was issued will most likely be the Date of Last Contact and will start the clock toward the 3 years of dormancy. For example:
- A check issued April 5, 2015 which is not paid as of June 30, 2018 is eligible for reporting on the 2018 escheat report.
- A check issued on September 28, 2015 and which is not paid as of June 30, 2018 is NOT eligible for reporting on 2018 escheat report. If not paid by June 30, 2019, it will then be reported on the 2019 report.
By the way, canceling and reissuing the outstanding check DOES NOT restart the Date of Last Contact. It just confuses your accountant and could lead to penalties and interest by the State Controller’s Office. Only reissue if you have made solid contact with the payee and know that the new check WILL BE cashed. Otherwise leave it on the Outstanding check list.
Files with funds, these show on your Trial Balance report, are a bit trickier. The Date of Last Contact is not necessarily the Date of Closing. The Date of Last Contact can be the last time the buyer or seller contact you by either phone, fax, email, or mail. If by:
- Phone – keep a written note of the phone call with the date and time, who you spoke with, a summary of the discussion, and most importantly, get contact information.
- Fax – keep a copy of all pages and scan a copy into your PDF escrow file
- Email – PDF print the email and add to your PDF escrow file, then print a hard copy and keep it in the escrow file.
- Mail – scan a copy into your PDF escrow file and keep a copy of the document, plus the envelope, in your escrow file.
In the correspondence did the party:
- Acknowledge the funds on hold?
- Tell you there is a dispute or litigation in progress,
- Ask that the funds remain on hold?
If 1 & 3 are answered Yes, then the Date of Last Contact is now move up to this contact/correspondence and the clock ticks on. You can see the importance of documenting all correspondence with the principals after the close of escrow.
At this point you’re probably saying Rosie, you should have told me this earlier. No worries, the next Escheat cycle is coming up. In January 2019 start looking at your reports to identify and hopefully contact the check payees or the buyer/seller of the funds in the file. June 2019 will come around quick enough.
And June 15th is the deadline for remitting the funds to the Controller’s Office.
Don’t you love Escrow!
As always feel free to contact RMA for assistance. We offer an affordable escheat service to facilitate and guide you.