Title of Regulation: 1VAC75-30. Regulations Governing Escheats (amending 1VAC75-30-10, 1VAC75-30-40, 1VAC75-30-60, 1VAC75-30-70, 1VAC75-30-90, 1VAC75-30-110, 1VAC75-30-120; repealing 1VAC75-30-20, 1VAC75-30-30).

Statutory Authority: § 55.1-2439 of the Code of Virginia.

Public Hearing Information: No public hearing is scheduled.

Public Comment Deadline: February 16, 2022.

Effective Date: March 3, 2022.

Agency Contact: Brad Earl, Director of Unclaimed Property, Department of the Treasury, James Monroe Building, 101 North 14th Street, 4th Floor, Richmond, VA 23219, telephone (804) 807-0073, FAX (804) 786-4653, or email bradley.earl@trs.virginia.gov.

Basis: Pursuant to § 55.1-2439 of the Code of Virginia, the State Treasurer shall adopt any necessary regulations to carry out the provisions of Chapter 24 (§ 55.1-2400 et seq.) of Title 55.1 of the Code of Virginia.

Purpose: The purpose of this revision to the escheats regulations is to update renumbering and language to conform regulations to Chapter 712 of the 2019 Acts of Assembly, which recodified Title 55 to Title 55.1. The Department of the Treasury affirms that the consistency between statute and the regulation is important to the public health, safety, and welfare with regard to the escheat regulations.

Rationale for Using Fast-Track Rulemaking Process: Outside of the renaming of the statute and several minor semantic changes, there were no substantive changes to the statute; therefore, it is deemed to be noncontroversial.

Substance: The Department of the Treasury has amended 1VAC75-30 to conform the regulation per Chapter 712 of the 2019 Acts of Assembly, the recodification of Title 55 as Title 55.1.

Issues: The primary advantages of the regulatory update for the public and agency are that the changes will eliminate potential confusion by the public concerning outdated statutory citations. There are no primary advantages and disadvantages to the agency or the Commonwealth.

Department of Planning and Budget's Economic Impact Analysis:

The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Code of Virginia (Code) and Executive Order 14 (as amended, July 16, 2018). The analysis presented represents DPB's best estimate of these economic impacts.¹

Summary of the Proposed Amendments to Regulation. As the result of a period review² and a legislative mandate,³ the State Treasurer proposes to amend 1VAC75-30 Regulations Governing Escheats (regulation) to update Code of Virginia citations that are no longer valid and remove obsolete or otherwise unnecessary information.

Background. Pursuant to a recommendation of the Virginia Code Commission, Chapter 712 of the 2019 Acts of Assembly⁴ created in the Code of Virginia Title 55.1 (Property and Conveyances) as a revision of the then existing Title 55 (Property and Conveyances). The Escheat⁵ Generally Statute was in Title 55 prior to the legislation, but is now in Title 55.1 and renamed Escheats. The regulation currently contains citations to the old Escheat Generally Statute using what are now obsolete numbers. The proposed action would update the regulation by revising the name of the statute and the Title 55.1 citations. Also, the proposed action revises an outdated reference to the Virginia Freedom of Information Act to the current correct citation.

An example of the obsolete or otherwise unnecessary information that is proposed to be removed is as follows: the State Treasurer proposes to strike the section titled "General," which contains information about statutory authority, because that information is already contained at the bottom of each section in the Virginia Administrative Code.

Estimated Benefits and Costs. Updating citations to the Code of Virginia would be beneficial because it helps enable readers of the regulation to find relevant information. Otherwise, the proposed amendments would not have any substantive impact in practice.

Businesses and Other Entities Affected. The proposed amendments affect readers of the regulation. People who are interested in becoming an escheator,⁶ auctioneer for an escheat auction, or a bidder at an escheat auction, may be particularly interested in reading the regulation.

The Code of Virginia requires DPB to assess whether an adverse impact may result from the proposed regulation.⁷ An adverse impact is indicated if there is any increase in net cost or reduction in net revenue for any entity, even if the benefits exceed the costs for all entities combined. The proposed amendments do not produce an adverse impact.

Small Businesses⁸ Affected.⁹ The proposed amendments do not adversely affect small businesses.

Localities¹⁰ Affected.¹¹ The proposed amendments neither disproportionally affect any particular localities nor affect costs for local governments.

Projected Impact on Employment. The proposed amendments do not affect employment.

Effects on the Use and Value of Private Property. The proposed amendments do not affect the use and value of private property or real estate development costs.

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¹Section 2.2-4007.04 of the Code of Virginia requires that such economic impact analyses determine the public benefits and costs of the proposed amendments. Further the analysis should include but not be limited to: (1) the projected number of businesses or other entities to whom the proposed regulatory action would apply, (2) the identity of any localities and types of businesses or other entities particularly affected, (3) the projected number of persons and employment positions to be affected, (4) the projected costs to affected businesses or entities to implement or comply with the regulation, and (5) the impact on the use and value of private property.

²See https://townhall.virginia.gov/l/ViewPReview.cfm?PRid=2006

³See https://townhall.virginia.gov/l/viewmandate.cfm?mandateid=1238

⁴See https://lis.virginia.gov/cgi-bin/legp604.exe?191+ful+CHAP0712

⁵According to the Department of the Treasury, "escheat" is "a process by which the state acquires title and/or custody of real or personal property which is unclaimed by, undistributed to, or presumed abandoned by the rightful owner."

⁶The current regulation defines "escheator" as any individual who has been appointed and qualified, and who continues in service in accordance with §§ 55-168 through 55-170 of the Code of Virginia. The proposed regulation updates the citation to §§ 55.1-2401, 55.1-2402, and 55.1-2403.

⁷Pursuant to Code § 2.2-4007.04 D: In the event this economic impact analysis reveals that the proposed regulation would have an adverse economic impact on businesses or would impose a significant adverse economic impact on a locality, business, or entity particularly affected, the Department of Planning and Budget shall advise the Joint Commission on Administrative Rules, the House Committee on Appropriations, and the Senate Committee on Finance. Statute does not define "adverse impact," state whether only Virginia entities should be considered, nor indicate whether an adverse impact results from regulatory requirements mandated by legislation.

⁸Pursuant to § 2.2-4007.04, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

⁹If the proposed regulatory action may have an adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include: (1) an identification and estimate of the number of small businesses subject to the proposed regulation, (2) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the proposed regulation, including the type of professional skills necessary for preparing required reports and other documents, (3) a statement of the probable effect of the proposed regulation on affected small businesses, and (4) a description of any less intrusive or less costly alternative methods of achieving the purpose of the proposed regulation. Additionally, pursuant to Code § 2.2-4007.1, if there is a finding that a proposed regulation may have an adverse impact on small business, the Joint Commission on Administrative Rules shall be notified.

¹⁰"Locality" can refer to either local governments or the locations in the Commonwealth where the activities relevant to the regulatory change are most likely to occur.

¹¹§ 2.2-4007.04 defines "particularly affected" as bearing disproportionate material impact.

Agency's Response to Economic Impact Analysis: The agency concurs with the economic impact analysis of the Department of Planning and Budget.

Summary:

The amendments (i) update citations to the Code of Virginia that changed due to the recodification of Title 55 to Title 55.1 pursuant to Chapter 712 of the 2019 Acts of Assembly; (ii) remove obsolete text and a form; and (iii) update a reference to the Administrative Process Act.

1VAC75-30-10. Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

"Agency" means the Department of the Treasury.

"Escheator" means any individual who has been appointed and qualified, and who continues in service in accordance with §§ 55-168 through 55-170 §§ 55.1-2401, 55.1-2402, and 55.1-2403 of the Code of Virginia.

1VAC75-30-20. General. (Repealed.)

These regulations are promulgated pursuant to the authority set forth in § 55-200.1 55.1-2439 of the Code of Virginia which requires the State Treasurer to adopt any necessary rules and regulations in accordance with the Administrative Process Act to carry out the provisions of the Escheat Generally Statutes Chapter 10 (§ 55-168 et seq.) of Title 55 of the Code of Virginia.

1VAC75-30-30. Effective date. (Repealed.)

This chapter shall be effective on and after July 1, 1992.

1VAC75-30-40. Annual reporting requirement for local government treasurers.

An Annual Escheat Report shall be submitted by each local government treasurer, director of finance, or other designated local government official to the appointed escheator for that locality and to the agency by May 31 of each year for the calendar year just ended. This report is required even if there are no real property parcels to be reported. The report shall be prepared on the appropriate form, or in an approved format, and shall be submitted on either hard copy or an acceptable diskette in a file layout and format approved by the agency. The report shall be certified as to its accuracy by the commissioner of revenue or designated local official prior to the May 31 submission date.

The local government treasurer, director of finance, or other designated local government official shall include in the Annual Escheat Report all real properties pursuant to § 55-171 § 55.1-2404 of the Code of Virginia.

1VAC75-30-60. Required bond for escheators.

Each escheator shall give bond for the judicial circuit for which he is appointed in the circuit court for the locality in which he resides. The bond in the amount of $3,000 must shall be obtained within 60 days of confirmation of the appointment and a copy of such bond should be provided to the Treasurer of Virginia State Treasurer. This bond shall remain in force as long as the escheator shall continue in office until removed or until a successor is duly appointed and qualified.

If property in another locality within the judicial circuit escheats to the Commonwealth at the inquest hearing, the escheator shall give additional bond pursuant to the requirements in § 55-169 § 55.1-2402 of the Code of Virginia.

1VAC75-30-70. Escheator's responsibility for collection of sale proceeds and remittance to State Treasurer.

The escheator shall be responsible for the collection of all moneys during the escheat process. Any and all moneys collected during the escheat process shall be deposited into the bank account of the escheator no later than the next banking day following the collection date. A check for the full amount collected shall be drawn on this account and made payable to the Treasurer of Virginia no later than 10 banking days following the deposit date. The escheator shall submit the check and complete columns 5, 6, 7, and 8 of the Annual Escheat Report Form received from the local treasurer or submit other supporting documentation for funds collected other than sale proceeds.

The escheator shall be responsible for the collection of any checks relative to the escheat process returned by the bank to the escheator's bank account for insufficient funds or any other reason which that makes a check uncollectible. The escheator shall institute procedures for collection of these moneys immediately upon notification from the bank that a check has been returned uncollected. The procedures shall include, but not be limited to, a written notice to the maker of the returned check advising the maker that payment, with certified funds or cash, be made within five business days of the correspondence date. In regard to a sale transaction, the notice shall state that failure to comply may result in (i) the forfeiture of any deposit and the resale of escheated property pursuant to § 55-187 § 55.1-2425 of the Code of Virginia, (ii) a suit to enforce specific performance of the sale agreement, (iii) resale of the property and suit for any damages resulting from default by the purchaser, or (iv) any other remedy at law or in equity available to a seller against a defaulting purchaser of real estate.

1VAC75-30-90. Required written disclosures to be made by the escheator at the escheat auction.

The escheator shall provide written information to any and all individuals who register as a bidder for an escheat sale that the grant for the escheated property will be issued in accordance with § 55-186.1 § 55.1-2422 of the Code of Virginia and that this statutory form of grant contains no warranty of title. In addition, the written information shall instruct any and all bidders seeking a recovery of proceeds from a sale of escheated property that the recovery of proceeds of each sale from the Commonwealth, less the expenses of sale and the escheator's fee, may be obtained if the buyer, pursuant to § 55-200 § 55.1-2438 of the Code of Virginia, submits satisfactory evidence to the State Treasurer within 120 days of the sale that the escheated property does not exist or was improperly escheated.

1VAC75-30-110. Reimbursable expenses and required documents of the auctioneer.

The auctioneer shall submit an expense report with supporting documentation to the State Treasurer within 30 days of the auction to ensure proper reimbursement of the auction expenses pursuant to § 55-186 § 55.1-2421 of the Code of Virginia. Reimbursable expenses shall include: advertisements, postage, payroll, and any other expenses directly related to the auction, but in no case shall the expense reimbursement exceed 5.0% of the proceeds collected. Proceeds do not include recording fees.

1VAC75-30-120. Fees charged for requests under the Virginia Freedom of Information Act (§ 2.1-340 § 2.2-3700 et seq. of the Code of Virginia).

Fees shall be computed on all requests for information under the Virginia Freedom of Information Act, Chapter 21 37 (§ 2.1-340 § 2.2-3700 et seq.) of Title 2.1 2.2 of the Code of Virginia, related to the escheat process. The fee assessed shall be determined based on the actual time of the employee performing the duties necessary to comply with the request and other costs incurred. Other costs include copies, postage, and any other cost directly associated with providing the requested information.

If there is an amount due the agency and it is in excess of 30 days past due, current and future requests for information will be withheld until the outstanding amount is paid to the agency. Continued failure to pay fees when due may result in the agency requesting payment in advance.

FORMS (1VAC75-30)

Annual Escheat Report, #ESH-1 (3/93).