In the event of fraud, dormancy or other irregularities, reclamation is the process by which an owner’s property is returned to them. There are many situations where reclamation can be requested:
- A trader in financial markets may ask for repayment or reclamation of stocks or securities that he or she purchased because of an error in the transaction.
- Reclamation is used to recover funds from accounts that have been neglected.
- It could also refer to the seller’s right to retake ownership of a property if the buyer does not comply with the purchase agreement.
Reclamation, in a completely different context, refers to the restoration of land such as abandoned mine sites or industrial areas to new productive use. Land is different from rehabilitation which involves restoring land back to its original state after it has been damaged, or degraded.
Reclamation refers to the process of claiming property or payment from a counterparty to a deal if they fail to deliver on their end of the agreement. Reclamation in the securities industry is reduced by reducing the likelihood of poor delivery. This is largely due to the modern system of electronically transferring and registering securities.
Reclamation as Foreclosure
Reclamation can be seen in the foreclosure procedure. The lending institution seizes the real estate property if the buyer fails to fulfill a mortgage repayment obligation.
Also, a form of reclamation is the repossession of property. A car is used as collateral to secure a car loan. The lender may reclaim the vehicle if you fail to pay the loan.
Investors have the right to recover their capital if the security is not delivered in a proper manner.
Reclaiming Property by Escheatment
A dormant account on a bank account is legally unclaimed after a specified dormancy period. The duration between the time a financial institution declares an asset or account as unclaimed and the time the government considers the asset or account abandoned is called the dormancy period.
Dormant accounts are considered unclaimed property after this time. The escheat statutes of the states govern how unclaimed funds are protected from being reverted to financial institutions. These laws require companies that unclaimed property be transferred from dormant accounts into the state general fund. The state is then responsible for the record-keeping and return of lost or forgotten property to owners, or their heirs.
Unclaimed property can be reclaimed by owners who file an application with the state for free or a small handling fee. Owners can always claim unclaimed property because the state will keep it in its custody forever.
Other assets that can be reclaimed
Reclamation can also be applied to other assets. Many of these assets are property that has been abandoned due to some mishap. All property that is not claimed or cashed by the rightful owner or heirs can be lost and recovered. This includes unclaimed CDs andIRAs, unclaimed payroll checks, unclaimed CDs, IRAs, life insurance proceeds, court orders, state tax refunds, and unpaid life insurance proceeds. All of these items are subject to escheatment. There is generally no time limit for reclamation. 1
Reclamation of Federal Funds
If Social Security or other benefits are not returned to beneficiaries after death, the government can use the reclamation process to recover them. This is typically conducted between the U.S Treasury and the financial institution processing the payment for beneficiaries. 2
How to Reclaim Property
Each state has its own laws for the reclamation or abandonment of assets. It is not possible to search for missing property using a single resource.
The website of the state comptroller is the best place to begin a process. Reclamation involves generally filing an application with the state agency.