Five Steps to Avoiding Litigation Over Drilled Safety Deposit Boxes, Part II
David P. McGuinn, President
Safe Deposit Specialists
Houston, Texas
www.sdspec.com
Had the institutiion in last week's sad story adhered to the following five steps, it could have avoided lengthy and expensive litigation.
Step 1. State Regulations
Follow your state's safe deposit delinquent box rent and unclaimed property regulations closely. These requirements differ from state to state, but most state laws dictate the required time periods, the type of notice given, and the required procedures that must be followed when drillng a past due box.
Step 2. Sending Notice
After mailing your annual rent-due invoices, if the rent is not paid, send only one friendly reminder and one past due second notice. If there is no response to any of these notices, it is a waste of time and postage to continue sending notices each month. Wait until it's time to end your final notice and make sure it's worded properly. Unless your state law requires a written disclosure that the box will be drilled and contents impounded, never mention this is your final letter. Tell the renter you will be taking legal action against him and you may turn him over to a credit-reporting agency if he doesn't respond within a specified number of days. Hopefully this language will get his attention. Never tell him that you are going to drill his box and impound the contents because most past due boxes are empty. Your renter obviously knows this and will ignore your demand letter and throw it away.
Step 3. Drilling Box
After the required notification period expires, the box can be drilled and the contents inventoried. This must be done under dual control on a properly worded box content inventory affidavit. Nothing listed on this inventory affidavit should appraise the box contents, (i.e. never list the items as gold, silver, diamonds, etc. They should be listed as yellow or white metal or jewelry with blue, red or clear stones.) A notary should also be present to notarize the inventory affidavit, which creates a legal document.
Step 4. Safekeeping Contents
After the box contents are inventoried, they should be placed in a tamper-resistent envelope and locked in safekeeping under dual control. A copy of the signed inventory affidavit should be secured in a sealed, clear pouch on the front of the envelope. The box renter's name, address, due date, box number, drill date, and all other important information must be visible for recordkeeping and retention purposes.
Step 5. Report Unclaimed Property
If your renter never claims the drill box contents, many states have a specific unclaimed property time period, usually ranging from three to seven years. When this retention period expires, the abandoned box contents must be reported and/or delivered to the state, and the state authorities will auction these unclaimed items.
In Conclusion
After reviewing these five important steps, how did your past due box drilling procedures stack up? Do you have copies of your state's safe deposit past due and unclaimed property regulations? Do you have a properly worded box content inventory affidavit? Do you secure all drilled boxes in tamper-resistent envelopes and provide dual control safekeeping protection? If you had difficulties with any of these questions and need assistance or additional information, contact the author at www.sdspec.com.
About the author: David P. McGuinn, president of Safe Deposit Specialists in Houston, TX, is a former banker. In all 50 states, he has trained over 250,000 safe deposit personnel since 1969. He has created numerous procedures and compliance manuals, training videos/DVDs, forms, brochures and other safe deposit products, including state specific drilling procedures, inventory affidavits, and tamper-resistent envelopes for drilled past due boxes.
