In various situations, New York State obtains abandoned property, which it holds in escrow until the rightful owner applies to release the property to it. This may arise from surplus moneys in mortgage foreclosure cases, deposits paid into court, or other statutory deposits.
The New York State Comptroller is in charge, by virtue of the Abandoned Property Law, of holding onto the funds or “abandoned property.” The Comptroller’s office maintains a list of all property it is holding, and makes the same available to the general public. By simply inputting one’s name into opens in a new windowthe Comptroller’s website, all records will be located.
However, sometimes the Comptroller’s search is not enough to locate all property to which a person may be entitled. An asset locator (a search firm engaged in this business) may locate other property to which a person may be entitled. One of the typical scenarios in which this occurs is:
In a mortgage foreclosure case, the real estate is sold at auction and a “surplus” is generated (which is the amount of money the real estate sold for above what the mortgagee/lender is entitled to). No party applies to the court for payment of the surplus moneys, and after five years, the local County Clerk pays the surplus moneys over to the State Comptroller as abandoned property.
In the above situation, the asset locator will help a party entitled to the surplus moneys (e.g., second mortgagee, judgment creditor, etc.) to locate the abandoned property, as it will not be held under its name.
Once the abandoned property is located, the Comptroller will issue a “Certificate of Deposit” and require that a Court Order be obtained for release of the property. A proceeding will need to be brought in the court in which the moneys were deposited for turnover of the surplus moneys deemed abandoned.
The proceeding, in which the court will order the turnover, must be conducted upon proper notice to all interested parties, along with notice to the Comptroller.
by Richard A. Klass, Esq.
R. A. Klass
Your Court Street Lawyer