Legislative Alert: Alabama HB 281

Recently, Alabama proposed HB 281, which may have a significant impact on holders. While the bill contains many changes to the Alabama unclaimed property statute, two changes are particularly interesting:

1. Changes how automatically renewable deposits become dormant by deleting the language that makes them dormant upon maturity.

2. Adds a condition for triggering the release of liability for property paid or delivered. The new language states that the holder must "have otherwise complied with the Unclaimed Property law”. For one thing, this may mean that if a holder does not perform due diligence the liability release may not apply. This could be troublesome language as it doesn’t provide a clear standard of what constitutes compliance or noncompliance (i.e., does failure to send the letter within the exact time limits equal noncompliance?) Note, California changed their unclaimed property law last year so that the release of liability was not only conditioned on payment or delivery of unclaimed property to the state but also on the condition that the holder, "has made reasonable efforts to notify the owner by mail…..” (Section 1561 (a)).

"(3) A demand, savings, or time deposit including a deposit that is automatically renewable, three years after the earlier of maturity or the date of the last indication by the apparent owner of interest in the property, but a deposit that is automatically renewable is deemed matured for purposes of this section upon its initial date of maturity, unless the apparent owner has consented to a renewal at or about the time of the renewal and the consent is in writing or is evidenced by a memorandum or other record on file with the holder, or the apparent owner has indicated an interest in the deposit.”

"(b) Upon payment or delivery of property to the Treasurer, the state assumes custody and responsibility for the safekeeping of the property. A holder who pays or delivers property to the Treasurer in good faith and has complied with this article is relieved of all liability arising thereafter with respect to the property.”

The analysis and opinions expressed herein do not necessarily represent the views of the Unclaimed Property Professionals Organization or its officers, directors or members. Dissemination of this information is being done at the request of the State. UPPO is not engaged in rendering tax, legal, accounting, or other professional advice or services. If tax, legal, or accounting advice is required, the services of a competent professional should be sought.