Most Common Safe Deposit Isses: 2007 Issues
Waverly Egbert, Senior Vice President
American Safe Deposit Services Inc.
www.americansafedeposit.com
During 2007, our American Deposit Services, Inc team completed over 150 safe deposit box audits in various financial organizations throughout the entire state of Texas. As a result of these audits, we would like to share with you the most common resulting issues.
A review of Safe Deposit Contracts found the following:
1. The name(s) on the contract are different from the name(s) on the computer system. Example:
The original contract contained one name. At a later date someone added to the system another name but did not update the contract with the two names. In some cases the added name was just entered on the original contract.
Contracts are dated and should never be altered! No white-out, corrections, additions, cross-outs or changes.
2. Name(s) on the contract and on the system, but no signature on the contract.
If the contract has not been signed by any lessee, that lessee should not be shown on the system.
Contracts should not be prepared showing names(s) without the signatures.
Contracts should be prepared with the names of the persons available to sign. If other persons are intended to be included as lessees on the box, either wait until all parties can come in to sign together or send a contract out for their signatures and have it returned to you for filing. If the contract is sent out for a signature and the lessee has not been personally identified by your organization, place a caution tab on the contract. The caution indicates that you must secure personal identification on the first request for access.
3. More signatures than names shown on the contract or on the system.
A name(s) or signature(s) should never be added to a previously prepared contract.
4. Typos in lessee name or box number.
Always verify that the name entered on the system matches the name entered on the contract and then compare both to the signature. Ask the lessee to verify that the name on the contract is spelled correctly.
5. All signers that were shown on the contract and whose signatures appear on the original contract, were not entered on the system.
Texas law requires that all certified mail to lessees MUST be sent to all lessees. This means that your organization must have not only the names but addresses for all lessees on the system so that you will be in compliance.
6. Contracts were found in the active file but were not on the system.
a. Some contracts were not properly pulled and signed by the customer indicating the actual release, but the keys had been surrendered and the box was verified as empty.
b. Some contracts had never been entered on the system. Access records were located and the customer had been making entries. No keys were found at the organization. This indicated that this box was actually leased but had never been entered on the system. Rental charges were missed as the contract was not on the system.
7. The box number leased was not shown on the contract. The audit crew was able to determine the box number from access records and verify with the system.
8. The contract was not signed by the organization employee or dated or only the day and month was shown on the contract.
a. A contract is an Agreement between two parties. It should be signed and dated on the date of complete execution of the contract.
b. The financial organization board of director’s should appoint, by title the person(s) who are authorized to sign safe deposit contracts on behalf of the financial organization.
The Patriot Act requires that identification should be secured on all parties doing business with the financial organization.
You may have all of the necessary information on parties with accounts, but other lessees on a box may not be account holders. Check driver’s licenses, ID cards, passports and or green cards for identification. All of the acquired information should be entered on your system. Many financial organizations are requiring a driver’s license or ID verification for every access to a box by any lessee.
9. Business box review revealed that the financial organization did not have a resolution specifying who was to be allowed access to the business’ safe deposit box.
A resolution specific to the safe deposit box should be maintained with the safe deposit contract. It should contain the names, identification and signatures of person(s) to have access. If signers change a new resolution is required.
10. Trust box review revealed that no documentation was on file at the financial organization indicating the Trust styling for the safe deposit box.
11. Power of Attorney signatures were found on some contracts but search of the files did not locate either the actual or a copy of the Power of Attorney.
12. POD – Payable on Death. This listing was found on many contracts. This is not an acceptable issue in safe deposit.
Safe deposit boxes cannot be “PAID” in the event of death of a lessee.
A review of the Computer Records found the following:
1. Accounts were opened on the system but no contract could be located. Access records were found and no keys were found. The lessee was contacted to verify lessees and vital information. A contract was prepared and sent to the lessee to sign with the explanation that the financial organization “is updating records” and needs new signature(s) on this new contract.
2. Box sizes shown on the computer were different from the actual size of the box resulting in incorrect rental charges to the lessee.
3. A comparison of actual box numbers to the system revealed box numbers that were never established on”the system.
A review of Access Records found the following:
1. No access record on file. Further research was done in the closed records to be sure that the box had not actually been surrendered.
2. An access record was found with no contract on file and the record not on the system. Research was preformed to associate access records with previously closed contracts.
3. Access records were signed by lessees but the contract did not contain the signature.
A review of all Closed Records found:
1. Keys to surrendered boxes had been placed with the closed records instead of in a surrender box so that the lock could be rotated and the box made available for rental.
2. Contracts were found in the closed files that had not been signed for surrender by the customer. Keys were located and the box was verified as empty. In some cases the box had been re-leased to other lessees.
3. Closed records were filed in no particular order.
They should be filed alphabetically by year of closure so that they can be declared obsolete after the proper retention period. Most organizations retain for a full 4 or 5 years.
4. No files were found of Delinquent Drill Records.
Texas law requires these records to be maintained for 15 years.
MYSTERY boxes were identified! A mystery box is one for which no contract was located, no keys were located and the box did not show on the system as rented. Our recommendation is to delay drilling these boxes for a period of 20 months to allow for found keys or found contracts which will solve the mystery.
About the Author: Waverly Egbert is a senior vice president of American Deposit Services, Inc. serving in Dallas, TX. She may be contacted at 1-800-880-0353.
