When is a dormant account officially designated as unclaimed property?
Many BC companies and organizations don’t realize that they have a legal obligation to locate and notify the owners of the dormant accounts that are sitting on their books.
Under the BC Unclaimed Property Act, an account is deemed to be dormant when a prescribed period of time has elapsed with no activity, ranging from as little as 7 days to 10 years depending on the type of account involved. Under BC law, credit unions, debt collection agencies, real estate agencies, companies in liquidation, municipal and provincial courts and municipalities, which are classified as mandatory holders, are required to make a “reasonable effort” to identify dormant account holders. If unsuccessful, the company or organization is required to transfer the outstanding funds to the BC Unclaimed Property Society (BCUPS). Other organizations holding trust funds, insurance policies, brokerage accounts and closed pension plans, which are classified as voluntary holders, are encouraged to voluntarily remit their unclaimed property accounts to BCUPS if the rightful owners cannot be located.
Currently, it’s estimated that there’s approximately $130 million in unclaimed funds sitting in dormant accounts in BC, not including funds held by the Bank of Canada which fall under federal jurisdiction.
When is a dormant account officially designated as unclaimed property in BC? That depends on the company or organization holding the funds, the provincial legislation governing the holder and the type of account.
Companies in Liquidation
Payments from companies in liquidation, for example, which fall under the Business Corporations Act, are designed as unclaimed six months after the date the money or assets become payable or deliverable if the rightful owner can’t be notified.
Cooperatives in Liquidation
Similarly, undistributed assets or money from cooperatives in liquidation, which are governed under the Cooperative Association Act, are officially declared as unclaimed property six months after the date on which any dividend declared by the liquidator becomes payable if the legitimate recipient can’t be found.
Public Guardian and Trustee
The Public Guardian and Trustee Act which governs Intestate Estates (estates without a will) doesn’t clearly spell out when proceeds from an estate are designated as unclaimed property. The date an estate is officially designated as “unclaimed” is at the discretion of the Public Guardian and Trustee.
Supreme and Provincial Courts
Section 18.2 of the Unclaimed Property Act governs court funds, and defines court funds as being “non-bail trust funds that have remained in court for at least 5 years.” Before court funds are transferred to BCUPS, they must be deemed unclaimed by a judicial officer.
With outstanding debt collections, which come under the Business Practices and Consumer Protection Act, the collection agent has 60 days to locate the creditor. If the agent can’t locate the owner after the applicable period of time, they are required to forward the outstanding funds to BCUPS within 7 days.
Employers – Unclaimed Wages
Employers holding unclaimed wages, which fall under the purview of the Employment Standards Act, have one year to locate the employee who is owed the funds. If unsuccessful, the employer is required to transfer the funds to the Employment Standards Branch of the Province of British Columbia within one year. The Employment Standards Branch, in turn, remits the unclaimed funds to BCUPS to be reunited with the employee owed the outstanding wages.
Municipal governments that owe money from overpayment of property taxes, utility bills, abandoned deposits, etc. fall under the Local Government Act. This Act stipulates that if surplus money remains unpaid six months after the redemption period, then the Council is required to run a newspaper advertisement detailing the name of the owner of the outstanding funds, the date payable and the amount owing. If the money remains unclaimed three months after publication, then Council is required to forward this money to BCUPS.
Real Estate Companies
Real estate companies holding outstanding deposits for longer than one year are required to transfer these funds to BCUPS if the rightful owner can’t be located under the terms of the Real Estate Services Act.
Abandoned credit union accounts can remain inactive for a decade before the financial institution has to locate and inform the rightful owner. Under the Financial Institutions Act, a credit union account is considered inactive if the depositor hasn’t accessed the account for ten years. After this time period, the credit union must send written notice to the depositor informing them of the inactive account. If the credit union hasn’t heard back from the depositor within 30 days, it is required to send the dormant funds to BCUPS.
In many cases, the dormancy period for unclaimed property is subject to interpretation under the various Provincial Acts. If you’re unclear about what’s classified as unclaimed property or when you should clear dormant accounts from your books, please contact the BC Unclaimed Property Society.
Unclaimed Property Dormancy Periods in British Columbia
|Company/Organization||When Property is Designated as Unclaimed|
|Companies in Liquidation||6 Months|
|Cooperatives in Liquidation||6 Months|
|Public Guardian and Trustee||Unspecified|
|Supreme and Provincial Courts||Unspecified (Usually 5 Years)|
|Debt Collectors||7 Days|
|Employers – Unclaimed Wages||1 Year|
|Municipal Governments||9 Months|
|Real Estate Companies||1 Year|
|Credit Unions||10 Years|