Thursday, December 31, 2009

Secret Santa: The State Escheat Lists

[a reprint of an article from 12-31-08, with updated links, because still relevant every year]

When you buy a gift card that is never used; when you walk away from the balance of an old bank account; or where someone dies owning securities but there is no heir to inherit the shares; where you move and forget about a deposit left with utility companies; where insurance money is due to unknown beneficiaries; where the lease on a safe deposit box lapses and no one shows up to pick up what is inside; what becomes of these property rights?  In feudal England, where our laws derive from, all unclaimed property returned to the King.  Like the end of a game of Monopoly, all the money went back into the box, to be redistributed in a new game.  The concept is called "escheat" and it survives in the laws of the fifty states.  As Blackstone said (I've always wanted to quote Blackstone - it sounds so authoritative), "The word itself is originally French or Norman, in which language it signifies chance or accident, and with us denotes an obstruction of the course of descent … in which case the land naturally results back … to the … lord of the fee." 

We have no lords of the fee these days, but still have the problem of what to do with lost or unclaimed property, and we have adopted the same solution:  the state has the right to all unclaimed property.  In the words of the Pennsylvania law, "All abandoned and unclaimed property and property without a rightful or lawful owner as hereafter set forth is subject to the custody and control of the Commonwealth …"  Of course in Pennsylvania they cannot claim property in Alaska or even New Jersey, and so the law further limits their reach to property that is physically located in Pennsylvania, and for intangible property, if the last known address of the owner is within the Commonwealth.  When is property considered abandoned and unclaimed?  The Pennsylvania law in its wisdom goes on for eighteen pages, but the bottom line is that for most property in an account, if there has been no activity for five years, then the property is presumed abandoned.  So how does the Commonwealth find out about what is unclaimed?  The holder of the property must file a report each year.  The Commonwealth then compiles a list, containing the names, items of property and last known addresses, if any, of the owners listed in the reports, and makes the information publicly accessible.  Before the Internet, that public notice was an ad in a newspaper in each county showing all of the unclaimed property for addresses in that county.  Now, those ads still run, but Pennsylvania has set up a website, at http://www.patreasury.org/unclaimedProperty.html , that is open 24 hours a day, seven days a week, with a search engine to easily search for any items by last name or company name of the owner.  New Jersey has a similar site at:  http://www.unclaimedproperty.nj.gov/lDelaware too:  http://php.delawareonline.com/state/unclaimed.php .  If you want to search for some other state, use the search term "unclaimed property" along with the state name. 

If you find a listing for property that may be yours, or someone you know, each site has a procedure for filing a claim, and a process for proving who you are and that you are entitled to the return of your property.  If the property is something other than money, then the state may have sold it, but will give you the cash value of the property realized in the sale.  There are companies who will file your claim for you for a fee, but as noted on the Pennsylvania site, "Our staff will assist you in recovering your property free of charge." 

So how big a problem is this for the Commonwealth?  In their own words, "The Treasury Department is seeking the owners of over $1 billion in unclaimed property.  In 2007, we returned nearly $88.8 million to over 63,000 owners."  That is a lot of unclaimed property.  I hope some of it is yours, or someone's that you know, and that in 2011 you thread your way through the process and help to return some of this amount to its rightful owners.  Pass the word!

©2010  Douglas P. Humes

Finders Keepers

In Concord, Pennsylvania last month, according to the Delaware County Daily Times, "State police said a 74-year-old man lost a large sum of money in a purple Crown Royal whiskey bag Monday morning."  There followed a spirited comment section in which some people claimed "finders keepers" as the law of the land, while others berated them for suggesting that the playground rule is actually the law.  This is one of those old sayings that I have always meant to track down to see if it actually represents what the law is.  What I found is that it is relatively true, at least in Pennsylvania, if you are dealing with "lost" or abandoned property. 

Where to begin on this subject?  In law school, one section of our class spent the first month talking about a case of two hunters finding a dead fox in the woods.  Who owns it?  The one who shot it or the one who found it first?  The discussion goes to the basic meaning of what "property" is.  In the days of the cave man, if you had possession of the item, then very likely it was your property, as long as you could defend yourself against those who would show up in your face and disagree.  Eventually came rules to try to resolve those situations without beating each other over the heads with clubs:  the law.  In English common law, a distinction was made between property lying above ground and beneath the ground.  If property was lost above the ground - lost by the true owner or abandoned - then the finder was entitled to keep the item.  The representative case given in my law school textbook was a 1722 incident where a boy found jewels while cleaning out a chimney.  A nearby jeweler claimed them as his.  The court ruled that the boy had a right to them against anyone but the rightful owner.  If the rightful owner can prove that the lost property is his, then the property is no longer "lost".  The finder is not even entitled to a reward.  But if what was found was a trunk full of jewels buried beneath the surface of the earth, then the property was called "treasure trove".  And who owned it?  The finder, the owner of the land, or the King?  In different parts of the world, and at different times in history, all of these answers have been true.  In England over the last 500 years or so, the answer is the King.  This practice has to some degree transferred over to the United States in our laws concerning escheat.  Property in certain categories, that has been left for too long in an old bank account, or securities that have gone unclaimed, are considered abandoned and the holder is required to send the property off to the state.  If you are the true owner, you can always reclaim it, but otherwise, the King still gets to keep it. 

In Pennsylvania today, the state of the law is that "the finder of lost property has a valid claim to the same against all the world, except the true owner," and that "the finder of money has title to it against all the world except the true owner."   Other cases suggest that "the place in which a lost article is found does not constitute any exception to the general rule of law that the finder is entitled to it as against all persons except the owner.  The right of the finder depends on his honesty and entire fairness of conduct.  The circumstances attending the finding must manifest good faith on his part.  There must be no reason to suspect that the owner was known to him or might have been ascertained by proper diligence."  Property is not "lost" when you reach into an unlocked car and "find" it.  Property is not lost when you know who the owner is, or know where to find him.  If you are following an armored car, like poor Joey Coyle in 1981, and a million dollars falls out, the property is not lost.  The law requires the finder to have a minimum of integrity and interest in the true owner.  And of course, what would the law be without exceptions?  If the finder is a policeman in the course of performing his duties, then he is an agent of the state, and must turn it over to the state.  If the true owner does not turn up, then this property is one of those categories of property that escheats to the state. 

So, where does that leave us?  If you are walking in Concord Township and find a purple Crown Royal whiskey bag containing a lot of money, can you keep it?  If you are a policeman on duty, then no.  If you have read the Delaware County Times article or this one, then no, you are on notice and you can find the rightful owner with relative ease.  But if a year from now someone is walking in the area and bends down and picks up a weathered purple bag containing a large sum of money, that seems to have been lost in the field, then most likely yes, he can keep it.  Finders keepers is still the law of Pennsylvania.

©2009  Douglas P. Humes

Wednesday, November 25, 2009

Rate Jacking and the Credit Card Companies - Fight Back

Tis the season … when we are all spending money on the holidays - gifts, entertaining, travel, perhaps year-end charitable donations, etc.  And when the outflow is going faster that the inflow, we have what businesses call a "liquidity crunch".   I don't know what all of you do when you are being crunched like that, but I will take advantage of the credit card offers that fill my mailbox - the ones with the promotional teaser rates - 0% through August, 2010; 1.99% through 12-31-10.  Yes, I have learned to read the fine print - and have noticed the "transaction fee" has climbed in recent years from a minimum dollar amount to between 2-4% per transaction.  But paying even 4% for the money for a year is better than paying whatever the "regular rate" is.  Right? 

Well, with online payments, with direct payments from banks, with paperless bills, there are times when I have simply lost track of my due date, and have not paid the minimum payment on time.  And of course part of the fine print in the original teaser promotion cautions you that if you have any late payments, then that wonderful deal that you signed up for, that promotional rate good through some time into the distant future, is no longer going to be honored.  If you don't keep your end of the bargain - by paying on time and not going over your credit limit - then the credit card company does not have to keep their end of the bargain.  In fact, they have already pointed out to you what happens in this event - in the smaller print at the bottom of the promotional letter, where it says: "However, all of your APR's (including this offer and any other promotional APR's) may increase as permitted by law up to the 29.99% variable default rate if you pay us late, go over the credit line, or make a payment to us that is not honored."  That's certainly not what you expected if you signed on for one of these rates.  But unfortunately, that is what you bargained for.  You made the deal with the Devil, and now he is knocking on your door for payment.  I have seen this practice referred to as "rate jacking", and it is a colorfully descriptive term for what has occurred.  Your credit card interest rate is jacked way up because you have made a simple mistake.  One day late, and your holiday goose is cooked. 

However, all is not lost.  Under the terms of the Credit Card Act of 2009 which took effect on Aug. 20, 2009, the credit card issuer must now give you 45 days advance notice that they are going to jack your rate up due to a delinquency or default or as a penalty.  Also, effective in February 2010, the issuer cannot apply a penalty rate until the consumer is more than 60 days delinquent on the account.  So, if you make that late payment just one time, they cannot then change the deal and jack the rate up.  They must send you that 45 day notice, with language in it disclosing the proposed changes; the "effective date, and, a notice that you have the right to reject the changes.  They must also disclose if they are will suspend or terminate any future use of your account as a result of your rejection of the change.  The notice will give instructions—and a toll-free number—for rejecting the change or rate increase.   Follow the instructions carefully, and if you are successful in jumping through their hoops, the telephone voice tells you that you were successful, and gives you a confirmation number.  Now get caught up on your delinquent payment.  And then go and sin no more. 

The new 45 day notice does not apply to an APR increase upon the expiration of a specified period of time, as long as the creditor disclosed clearly and conspicuously in writing the length of the period and the APR that would apply after that period.  In other words, if the original offer said "good through August, 2010, with a rate increase in August, 2010", then your credit card company does not have to give you a new 45 day notice.  Similarly, if you have a variable rate that was disclosed at the outset, then you will not be receiving a new 45 day notice each time the index fluctuates.  In addition to the 45 day notice provision, there is another beneficial (to consumers!) new requirement:  the credit card issuer must adopt reasonable procedures designed to ensure that your statements are mailed or delivered at least 21 days before the payment due date.  That gives you plenty of time to make sure that next payment is on time. 

In summary - don't pay late; if you do, don't ever pay 60 days late if you can help it.  If you get the 45 day notice telling you that you are going to be rate-jacked, then don't make any new charges on that card until you have decided whether you want to reject the change.  Read on in the notice until you get to the part about rejecting the changes.  Follow the instructions for rejecting the changes, and note the confirmation number.  If you have any doubt about the consequences of rejecting the change, first call your credit card customer service number, speak to the rep and ask the question - "if I reject this change, and pay the delinquency, am I still allowed to use the card in the future?"   Write down the date of the phone call, the customer service rep's name, and the advice that you are given.  Then make an informed decision.  The rules are changing, and you as the credit card consumer have more rights as a result of the recent changes in the law.  Don’t be afraid to use them.  That will make for a happier holiday!

©2009  Douglas P. Humes

Thursday, November 19, 2009

Searchable case law free on Google

Google continues to amaze me. Their latest project:  searchable case law. Lawyers are familiar and comfortable with searching for case law, courtesy of the two giants in the field, Westlaw and Lexis, which each provide extensive data bases of case law, statutes, rules and regulations from jurisdictions around the world. For a price, of course. This week, Google has come out with what seems to be a similar product: a searchable data base of "full text legal opinions from U.S. federal and state district, appellate and supreme courts using Google Scholar." See their blog entry which describes the product in more detail. Or go directly to Google Scholar to check it out. Note below the search box that the default search is for their data base of "Articles". You need to instead check "Legal opinions and journals" to search for case law.
The simple search will bring you more results than you need or want or could use in a lifetime. Pick a broad topic like "abortion" and you get 106,000 hits. That type of result is useless for lawyers or laymen, and so that is why you need to read the instructions, and learn to do a more focused search. You can select "advanced scholar search" and that will begin to bring some order out of chaos. Put "abortion" and "hawaii" in as your search terms, and search the jurisdiction of Hawaii only, and you get 21 hits. That's a much more manageable search result. Try using "dog" and "bite" for the jurisdiction of Pennsylvania, and you get 213 hits. Use the date options to narrow the focus to cases from 1980 to present and you now have 156 cases. Use the phrase "dog bite" instead, and that will leave out the cases that mention a dog and a bite but not a "dog bite" and now you have 47 cases. Add the word "death" to the search and you now have 12 cases. That does not mean that those cases involve a death from a dog bite, or that this is the whole universe of dog bite cases. It simply means that those cases contain the phrase "dog bite" and "death". What your search turns up depends upon how carefully you phrase your search request. And that in turn depends on how well you use the tools that Google gives you. Go to the "advanced search tips" page to get more tips on searching in Google. You can use the more advanced Boolean operators that Google permits - such as the very useful "minus" sign followed by a word or phrase that you do not want to appear in the search: -poodle [will leave out any results that otherwise meet all of your criteria but have the word "poodle" in the opinion] or -"german shepherd" [will leave out any results that otherwise meet all of your criteria but have the phrase "german shepherd" in the opinion]. The Scholars help page only shows the tip of the search iceberg. Go to the regular Google search basics page to find the full tool set of Google search basics.
So will this latest Google feature put Westlaw or Lexis or lawyers out of business?   I am guessing no, at least in the near term.  As lawyers, we have a very persuasive reason to use the tried and true data bases that we are familiar with:  malpractice claims.  We don't yet have faith in how extensive the Google data base is - how far back it goes,  how up to date it is, how thorough it is.  We need more certainty that this new product provides right now.  We will likely continue to use the law libraries, and the legal search data bases that we are accustomed to.  If we rely solely on Google right now, without knowing its parameters, then we are  opening ourselves up to possible malpractice claims if the Google data base is not as thorough as what we have come to trust, and as a result, we miss a citation that perhaps is decisive of a particular case.  So for now, I think Westlaw and Lexis are safe, though there should be alarm bells ringing at each of their headquarters.  The Google camel has stuck its nose in their tent.

Will this take business away from lawyers?  I think at this point that is unlikely too.  Are neighbors going to resolve their issues by sitting down in front of a computer screen and looking over the cases and agreeing that the dog owner is going to pay his neighbor for the dog bite?  In a perfect world, perhaps that would occur, but I don't think we are there yet, at least not in this part of Bryn Mawr.  Most intractable disputes will still be decided by an arbiter, a judge or a jury, with the use of an advocate, the lawyers.  In certain instances, the Google data base may actually grow the legal business.  I am reminded of the time that I attempted to make a repair on a toilet in my home.  I was new to home repairs, and just finding out what I could do.  I had my Readers Digest Handyman's Book, and that told me exactly how to do the job I was taking on.  And yet it can't provide all of the nuance and experience necessary for the actual task, it can't tell me what torque to apply and when to back off rather than using a bigger wrench and brute force to try to loosen a nut.  And as a result, I cracked the whole toilet unit and the whole thing had to be replaced.  By a plumber.  I looked over his shoulder as he performed the job, and at the end asked him if he minded me kibitzing while he worked.  And he smiled and said, "Nope.  I love guys like you.  You make more work for guys like me!"

And so it may go with the new ability to do your own legal search.  It will be wonderful for educating the client, but as before, the client who acts as his own lawyer may well have a fool for a lawyer.  And that makes more work for guys like me.

Monday, November 16, 2009

2009 Amendments to Pennsylvania Mechanics Lien Law

The Pennsylvania Mechanics Lien Law was originally enacted in 1963 to give contractors, subcontractors, materialmen and suppliers, and even architects and engineers a statutory remedy, a mechanics lien, for the non-payment of debts due by an owner to the contractor (or by the contractor to any of his subcontractors) for labor or materials furnished in the erection or construction, or the alteration or repair of the improvement to real property. Rather than file a full blown lawsuit, the contractor could follow a relatively simpler and less expensive lien procedure, and if successful, the contractor would obtain a lien on the real estate, and so improve its position vis a vis unsecured creditors, and in the right set of circumstances, the lien claim could slip in front of or "prime" a mortgage or construction loan advances. The 1963 Law permitted a contractor to waive the right to file a lien, for himself and for his subcontractors. In practice, construction lenders naturally preferred to have their position fully protected against any potential mechanics lien claims, and so insisted on having the owner negotiate with the contractor to have lien waivers filed before the project commenced. Lien waivers, when properly executed and recorded ahead of any work on the project, were effective in taking the powerful lien weapon out of the contractor's hands.

The worm turned in 2006, when the Pennsylvania legislature passed Act 52, which made several changes to the 1963 Law. The principle thrust of Act 52 was to limit the situations in which an owner could negotiate with a contractor to waive its lien rights. For residential buildings, contractors and subcontractors were permitted to waive their rights if the contract price was less than $1 million. For commercial projects (anything not "residential property"), the contractor could give a waiver only after he had been paid in full - he could not waive the right in advance. A subcontractor could also give an "after payment" waiver; or could also give a waiver if the contractor had posted a bond guaranteeing payment for labor and materials provided by subcontractors. Any other waiver was essentially declared to be against public policy and unenforceable.

Due to uncertainty as to what was embraced in the definition of "residential building" for purposes of Act 52, the legislature addressed the issue again over the summer of 2009, with the newest changes effective October 13, 2009. The 2009 amendments are limited in number: the main change is some tinkering with the definition of "residential property" in Section 1201, and the waiver of lien section 1401(a). In place of the $1 million contract concept, the Act now defines a "residential property" to be an existing or to-be-constructed "residential building not more than three stories in height, not including any basement level, regardless of whether any portion of that basement is at grade level", or a property zoned residential on which such a building will be built, or a property which has received preliminary, tentative or final approval and on which such a building will be built. The thrust of the change seems to be to limit the right to request waivers from a contractor to those situations involving Single-Family or 1-4 Multi-Family Homes no higher than 3 stories.

Does that clear up the ambiguities in this Act? If your project is clearly within the definition of "residential property", then as an owner you are entitled to ask for a waiver from your contractor, and if it is timely filed in accordance with the Act, it will be effective and enforceable. What about the town center concept - retail on the 1st floor and residential units above? Any other kind of mixed use involving residential in part and some other commercial component - the planned community with a stand alone community center or other community buildings? The Act is silent on those issues. As a practical matter, I don't think a court is going to enforce a filed waiver on just the residential portion of a mixed use project, unless the residential property is separately titled. When you are asking for the contractor or subcontractors to file a waiver in a mixed use situation, you are rolling the dice on whether a court will enforce it or not. And of course, the Act does not require a contactor to waive its rights; but only makes it a negotiable issue between owners and contractors.

For owners, contractors, subcontractors, architects, engineers and others affected by the Act, you need to re-visit your understanding of the Act and the procedures you may currently be following to see that they are in line with what is now permitted.

And when in doubt, ask your friendly neighborhood lawyer!

© 2009  Douglas P. Humes

Friday, November 13, 2009

"Blogito, ergo sum"

Descartes is credited with first saying "
Cogito ergo sum" ("I think, therefore I am").  He was addressing the  philosopher's need to determine whether in fact he exists, before moving on to more difficult constructs.  Call me intellectually lazy, but I am content to assume I exist, without further proof.  I have moved on to the current question - why blog?  

We are inundated with information in the 21st century - we have the whole world at our disposal on a laptop computer.  We can visit the Louvre, view livecams  from all over the world, do genealogy research, legal research, read newspapers and magazines from around the world in any language, find an answer (not necessarily the right answer or the best answer, but an answer) to virtually any question that we can ask by using a search engine.  And each day more information comes on line.  So why add to it?

Law is a communication field.  In a law office, we don't need too much in the way of fixturing - a desk, some basic office machines and a couple of chairs will do.  Our basic tools are our ability to read, write and analyze in a particular fashion.  Our law school training teaches us to approach each problem and issue the same way - to take nothing at face value, to demand proof before forming any final opinions, to see all sides of a particular issue, and to analyze the relative strengths and weaknesses of those positions.  We don't know which side is going to walk into our office and so we must be prepared to see a problem and the proposed resolution in the light that works most favorably for our clients.  We are not "the deciders" - we are not the judges.  Our job is not to dispense justice ourselves, but to be zealous advocates on behalf of our clients.  We present their facts, their theories, their particular legal needs, in the most favorable light.  A judge or a jury makes the decision whether someone who spills hot coffee on their lap is a victim or a fool.  When I read about one of those sensational cases with an outcome that seems to turn common sense on its head, I wish I were in the courtroom to see what the lawyer may have said to convince twelve people on a jury of something which so many people are outraged about.  I don't blame the lawyer for the result.  He has done his job, played his part in the system, and he has been a very effective communicator and advocate for his client.  

As communicators, lawyers must adopt the latest tools.  I have been slow to the game of blogging.  I was an internet dweeb in the early 1990's, when to get on (outside of academia) you used an internet provider such as Prodigy, or Compuserve.  In those early days of the internet, there were an accepted set of rules, called "Netiquette" , that kept the conversation relatively civil.  The occasional violators of the standards were "flamers" and when they engaged others, the result was a "flame war".  But it was surprising how civil the communication was then.   At least in my memory!

How life has changed.  Now, much of what passes for public debate these days is composed principally of anger, emotion, half-truths and nonsense.  There is no netiquette these days.  If you have ever been to a dog park - a public space set aside to let dogs run free and play with each other -  that is what I see in the field of public debate.  Two packs of angry dogs hold sway, running back and forth across the field, protecting their turf, and ripping to pieces any dog from the other side that ventures too close.  No moderate dogs need apply.  While it is wonderful that so many people are now given a platform to voice their concerns, we now have to work on the quality of the debate.  

And so that's where I come in.  I am in the field of communications.  My particular tools are supposed to be reading, writing and analyzing.  Some people have different tools than I do, some have better tools, but I am ready to throw my thoughts in to the mix.  My goal going in is to stick to my knitting and write about issues in my legal practice areas.  I don't plan to take on the great public issues of the day.  My goal is to be informative rather than opinionated.  Time will tell whether I am successful.  Will people read what I write?  I am not that concerned about readership.  I have been journaling for myself since junior high (back when there was a place called "junior high"), and so am used to writing for my eyes only.  I find that be making myself write, I better organize my thoughts and come to better conclusions.  And so I will continue to write for myself.  If readers on occasion find it helpful, then that's icing on the cake.  

Everything we post up on the internet is cataloged and saved ... somewhere ... and perhaps forever.  Items from the past are now being added and cataloged and available to us today.  I can read about the times when my ancestors were mentioned in the newspapers that are now online from the 19th and 20th centuries. I wish they had written more letters to the editor so I could learn a little more about them.  Too often the only mention that I can find is when they died-a death notice.  How will our descendants hundreds of years from now know that we existed, if we don't contribute our share?    

And so to update Descartes for the 21st century:  Blogito ergo sum.  I blog, therefore I am.