Curiously, though all county treasurers received this email, only one provided a copy, and trust me, it wasn't Darryl Pheasant.
As mentioned in an earlier post, some three million dollars has escheated to county expense funds in the last five to 10 years.
Though the record is incomplete, we have confirmation from Washington State county treasurers that no less than three million has gone unclaimed and now belongs to those counties through escheatment.
But, things aren’t always as they seem, are they?
Who’s escheating who?
Several months ago, on a hunch, I decided there had to be more to the story and got to work, pouring over the docs, the regs, and the statutes.
And, sure enough, by the end of the day, I’d found something.
Turns out in 2004, language was added to the overage statutes that, in my mind at least, confirmed what I’d maintained all along . . . that three million dollars is not, never was, and never can be the county’s money.
What was added?
Here’s the old statute . . .
In the event no claim for the excess is received by the county treasurer within three years after the date of the sale he or she shall at expiration of the three year period deposit such excess in the current expense fund of the county. — RCW 84.64.080, Pre June 10, 2004
And the new . . .
In the event no claim for the excess is received by the county treasurer within three years after the date of the sale he or she shall at expiration of the three year period deposit such excess in the current expense fund of the county which shall extinguish all claims by any owner to the excess funds. — RCW 84.64.080, Post June 10, 2004
Added is the very last part of the sentence, “. . . which shall extinguish all claims by any owner to the excess funds.”
If these funds escheated to the county, as we’ve been told for years, why is that new language even needed?
I’ll tell you why.
Use v. Own
Escheatment, it turns out, is a very big deal.
Our money can’t magically turn into some government agency’s money by accident, or without a good reason. And, equally important, it can’t happen without language in the law that clearly establishes the escheatment claims of the agency.
Does the statute, “at expiration of the three year period [the county treasurer shall] deposit such excess in the current expense fund” even address the ownership of those funds?
Of course not.
It merely says the county may USE the funds, much like the state uses unclaimed funds, but as to ownership, there is NO change.
Moving funds from one account to another, as the law provides, IS NOT ESCHEATING, and WA state county treasurers know this. That’s precisely why, in 2004, the language, “forever extinguish,” was added to the law.
So what about pre June, 2004 overages?
They’re still owned by the folks who lost their properties to tax foreclosure. Yes, all three million dollars.
But, not according to Pierce County Deputy Prosecutor Bob Dick.
We recently submitted a claim to Pierce County for a pre 2004 overage and received the following response . . .
This is in response to your client’s claim for the surplus proceeds from tax foreclosure on real property that was sold on December 6, 2002. According to RCW 84.64.080, after three years from the date of sale any owner loses the right to claim the excess funds. Therefore, we are denying your claim. — Mas Jones
Pierce County Budget and Finance
That’s what the law says?
Of course, I’m not an attorney and my opinion doesn’t count all that much in these matters. I’m looking at things as a layman. Still, my gut tells me the fix is in.
And then I received records from one of the last counties to respond to my public records request.
I’d asked the state’s county treasurers for all records relating to discussions with other county treasurers about tax sale overages, and there it was, an email from Grant County Treasurer Darryl Pheasant to the “Association,” the group of all 39 county treasurers.
Curiously, though all county treasurers received this email, only one provided a copy, and trust me, it wasn’t Darryl Pheasant.
Subject: Fw: excess proceeds
I have been talking to Judith in the Unclaimed Property Section and this is their take on Foreclosure Surplus Overage that I do not agree with. I was believing as an Association that we believed that after 3 years the monies go into the Current Expense fund and were no longer recoverable. Is that also how you interpreted it or am I way off base?
> Mr. Pheasant,
> I have attached our UCP Audit Team Manager's response to an inquiry
> regarding excess proceeds from foreclosure.
> [excess proceeds.doc]
> Please contact me if you have further questions.
> Judith Hauge
> (360) 664-2202
Apparently, Darryl disagrees with the State of Washington’s take on how excess funds should be handled.
And how are they to be handled?
It took us months and at least six separate requests to get a copy of the Department of Revenue’s Unclaimed Property Section document, “excessproceeds.doc” from Grant County. Six!
What was Darryl hiding?
Patrick Tate, Audit Manager of the Unclaimed Property Section of the Washington State Department of Revenue, one would think, knows how those funds are to be handled. It’s his job to know.
And, according to the Department of Revenue, those excess funds DO NOT ESCHEAT TO THE COUNTY.
They never did.
Mr. Tate is quite clear about it, saying . . .
. . . RCW 84.64.080 does not extinguish the claim of an owner in excess proceeds . . .
In the third year, the county may move the money to its current expense account subject to the future claim of an owner . . .
The excess proceeds can be transferred to the expense fund, but the county would remain liable to pay owners in perpetuity . . . — Patrick Tate
Audit Manager, UPC, Dept. of Rev.
The smoking gun
Did he really just say “in perpetuity?”
You’re damn right he did.
The smoking gun?
excessproceeds.doc. (click link).
And Pierce County’s assertion my claim should be denied because the three years in which to claim it lapsed?
100% not true.
Here’s Mr. Tate, returning medals to Rosalynn Summers . . .
It’s clear, even though all county treasurers in this state know the overage funds they’re holding from pre June, 2004 tax sales are still owed to the folks losing their properties, at least one, Pierce County, chooses to pretend it does not.
I suspect the response from all other counties today to any claims against these overage will result in the same “sorry, you’re too late,” denial.
And that’s at least three million dollars of equities stripped from Washington State property owners.
There’s your next foreclosure scam, Rob, and btw, this one’s actually real.
She’s assigned it to me, and I think it’s time I go get it for her. Don’t you?
In the arena,