Adam Hayes
Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.
Katrina Munichiello
Fact checked by Katrina Munichiello
Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.
What Is Reclamation?
Reclamation is the process of demanding the return of property to a former owner in the event of dormancy, non-payment, fraud, or some other irregularity. Reclamation may be sought in a number of contexts:
In the financial markets, a trader may demand reclamation, or repayment, for stocks or other securities purchased, due to some error in the transaction.
Reclamation is sought to recover funds from neglected accounts.
It may also refer to the right of a seller to resume ownership of a property if the buyer fails to meet the terms of the purchase agreement.
In an entirely different context, reclamation refers to restoring lands such as closed mine sites or defunct industrial areas to new productive uses. Land reclamation differs from rehabilitation, which involves restoring land to its natural state after it has been damaged or degraded.
Reclamation entails the recovery of property or payment when the other party to a transaction fails to meet the terms of the agreement.
Repossession of collateral is a reclamation process.
The return of holdings in dormant bank accounts also is a reclamation process.
Understanding Reclamation
Reclamation is the process of reclaiming property or payment if a counterparty to a deal doesn't deliver on their part of the agreement. In the securities industry, reclamation is minimized by cutting down the chances of bad delivery. This has been largely achieved by the modern system of registering and transferring securities in book or electronic form rather than exchanging paper certificates.
Foreclosure as Reclamation
The foreclosure process is an example of reclamation. In this case, the lending institution reclaims ownership of a real estate property when the buyer defaults on a mortgage repayment obligation.
The office of the state comptroller is usually the place to start a process of reclamation of abandoned assets.
Repossession of property is also an example of reclamation. A car is a form of collateral that secures a car loan. If you do not pay the loan, the lender can reclaim the car.
In the same way, an investor has the right to reclaim invested capital if delivery of the underlying security is not done properly.
Reclaiming Property via Escheatment
Property such as a dormant bank account is considered to be legally unclaimed beyond a certain dormancy period. The dormancy period is the length of time between when a financial institution reports an account or asset as unclaimed and when the government deems that account or asset to be abandoned.
After this period, dormant accounts become unclaimed property. States have escheatment statutes that govern the process of protecting unclaimed funds from reverting to the financial institutions that hold them. These laws require companies to transfer unclaimed property from dormant accounts to the state general fund. The state then takes the responsibility for record-keeping and returning lost or forgotten property to owners or their heirs.
Owners can recoup unclaimed property by filing an application with the state at no cost or for a nominal handling fee. Because the state keeps custody of the unclaimed property in perpetuity, owners can claim their property at any time.
Other Assets that Can Be Reclaimed
There are a number of other types of assets that are subject to reclamation. Most involve property that has been abandoned by some mishap. Uncashed payroll checks, unclaimed CDs and IRAs, unpaid life insurance proceeds, court awards, and even state tax refunds are all subject to loss and reclamation by their rightful owners or heirs. All are also subject to escheatment. There is usually no time limit on the right to reclamation.
Reclamation of Federal Funds
The government has a reclamation process used to recoup payments of Social Security and other types of benefits if they are not returned after the death of the beneficiary. This process is usually conducted between the U.S. Treasury and the financial institution that processes the payment for beneficiaries.
How to Reclaim Property
Every state has its own laws regarding the reclamation of lost or abandoned assets. There is no centralized resource for searching for lost property.
In most cases, the website of the office of the state comptroller is the best place to start a reclamation process. The process of reclamation generally involves filing an application with a state agency.
U.S. Securities & Exchange Commission. "Escheatment by Financial Institutions." Accessed Jan. 14, 2021.
U.S. Treasury. "Greenbook, Chapter 5: Reclamation," Page 5-3. Accessed Jan. 14, 2021.
Escheat Definition
Escheat is a government's right to assets when assets are unclaimed, or a person dies without a will and legal heirs.
Abandoned property is an asset that has been turned over to the state after several years of inactivity.
Dormant Account: Definition, How It Works, and Example
A dormant account is an account wherein there has been no financial activity for a long period of time, other than the posting of interest.
What Are Unclaimed Funds? Definition, How They Work, and Example
Unclaimed funds are money and/or other assets whose owner cannot be found.
Bona Vacantia
Bona vacantia, also known as vacant goods, refers to property without a clear owner. Bona vacantia assets may be abandoned or unclaimed by its owner.
Bailor
A bailor is an individual who temporarily entrusts possession of a good or other property to another party under a bailment agreement.
How Can You Reclaim Unclaimed Property?
Certificate of Deposits (CDs)
How to Inherit a CD
Declining an Inheritance
First-Time Homebuyer's Guide
Deducting Disaster: Casualty And Theft Losses
How to Sell a Car With a Lien