Owner Location Services for Safe Deposit Boxes
In many states, tangible property, such as safe deposit boxes require escheatment to the state by holders. This means the same due diligence outreach is a requirement to reach these owners as with other property types.
Unclaimed Property Laws and Safe Deposit Boxes
When it comes to Safe Deposit Boxes, like other types of unclaimed property, they must be monitored for escheatment. One of the things that makes Safe Deposit Boxes different and challenging from other types of Unclaimed Property is the costs associated with escheatment. When a box is determined to be escheatable (which we’ll talk about below), there are costs associated with the drilling of the box, inventory and storage of the contents, possible auction or advertisement costs as well as shipping costs to various state unclaimed property offices. This could end up costing financial institutions upwards of $500 per safe deposit box.
To reduce liability and avoid these costs, as lease or rental periods expire and/or the customer stops paying their box rent, it is important to ensure proper communication gets through to the owners of safe deposit boxes so they can pay any back box rent, surrender their keys and clean out their box. The more owners a financial institution can locate prior to drilling, the less liability and costs they will incur. Locating owners prior to drilling will not only will save you money, but potentially save and restore relationships with customers as well.
Locating Safe Deposit Box Owners
Determining the reporting and delivery of safe deposit box contents, can vary by state. Each state has a unique set of requirements related to dormancy periods, contents they accept and delivery requirements for safe deposit boxes. In most states, the dormancy trigger is usually related to when the lease/rental period expires or the non-payment of box rent. Due diligence notification is a requirement for safe deposit boxes just like other types of unclaimed property. When notifying owners regarding drilling and escheatment for safe deposit box due diligence, it may seem confusing as the process may be unique depending on the state. Additionally, customers may use different addresses on the safe deposit box vs. their deposit accounts.
In addition to the pre-escheat due diligence, some states may require you to send a pre-drill notice to the owner of the box. This step of locating owners can be very important, as drilling and escheating the box contents adds an additional level of complexity that increases liability, requires more time, cost, and effort than intangible property. Even if a pre-drill notification isn’t required, Keane recommends taking steps to locate the owner prior to drilling.
Closing Branches or Decommissioning Boxes?
Another problem facing financial institutions is the decision to close branches or decommission safe deposit boxes. This too can be a costly undertaking and the laws surrounding escheatment on boxes in this category aren’t clear. So again, locating the owner prior to drilling the box is key. Our experience is that many financial institutions will send a pre-drill notification letter to safe deposit box owners when a branch is closing or they are decommissioning boxes. Yet, what happens when those letters come back as undeliverable? Employing enhanced owner location efforts to find the owner or heir can save you time, money, and potential claims from box owners.
Recently, a large financial institution had to pay $2.5 million to a woman who lost the contents of her safe deposit box in a branch closure. With the correct research, outreach, and knowledge of state unclaimed property laws this could have been prevented and avoided. When safe deposit box owners aren’t located prior to drilling, it can be messy and costly for a lot of financial institutions. Proper inventory controls and documentation as well as owner location methods can help protect financial institutions from fraudulent claims regarding safe deposit box contents.
Owner Location Services
Keane’s owner location, retention, and communication programs are the number one choice of the financial services industry because we have unmatched resources for locating owners, minimizing escheat, and maximizing the value returned to owners and their beneficiaries. From basic electronic searches and mail services to in-depth research and outreach programs to locate dormant account owners and beneficiaries, we offer fully customized programs to meet our client’s requirements and targeted objectives, delivering clear, measurable results. While we’re proud to have successfully reconnected over one million individuals with more than $8.5 billion in assets, we’re even more proud of the accolades our owner location teams receive for client satisfaction.
Keane has over 70+ years of experience in the research, and outreach services necessary for success. With Keane’s help, getting in contact with the right owners can be a breeze, limiting the amount of risk and escheat financial institutions will have to endure when it comes to the complexities of safe deposit boxes. We work hard to help banks avoid the sticky situations that can arise when safe deposit boxes become dormant by locating owners ahead of time, saving time, cost, and confusion upon dormancy events and branch closures. Let us help you.