Escheat
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Property law |
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Higher category: Law and Common law |
Escheat /ɪsˈtʃiːt/[1][2] (from the Latin excidere for "fall away") is a common law doctrine that transfers the real property of a person who has died without heirs to the crown or state. It serves to ensure that property is not left in "limbo" without recognized ownership. It originally applied to a number of situations where a legal interest in land was destroyed by operation of law, so that the ownership of the land reverted to the immediately superior feudal lord.
Etymology
The term "escheat" derives ultimately from the Latin ex-cadere, to "fall-out", via mediaeval French escheoir.[3] The sense is of a feudal estate in land falling-out of the possession by a tenant into the possession of the lord.
Origins in feudalism
In feudal England, escheat referred to the situation where the tenant of a fee (or "fief") died without an heir or committed a felony. In the case of such demise of a tenant-in-chief, the fee reverted to the King's demesne permanently, when it became once again a mere tenantless plot of land, but could be re-created as a fee by enfeoffment to another of the king's followers. Where the deceased had been subinfeudated by a tenant-in-chief, the fee reverted temporarily to the crown for one year and one day by right of primer seisin after which it escheated to the over-lord who had granted it to the deceased by enfeoffment. From the time of Henry III, the monarchy took particular interest in escheat as a source of revenue.
Background
At the
Where no legal heir existed, the logic of the situation was that the fief had ceased to exist as a legal entity, since being tenantless no one was living who had been enfeoffed with the land, and the land was thus technically owned by either the crown or the immediate overlord (where the fee had been
Escheat could also take place if a tenant was outlawed or convicted of a felony, when the King could exercise the ancient right of wasting the criminal's land for a year and a day, after which the land would revert to the overlord. (However, one guilty of treason (rather than mere felony) forfeited all lands to the King. John and his heirs frequently insisted on seizing as terrae Normannorum (i.e. "lands of the Normans") the English lands of those lords with holdings in Normandy who preferred to be Normans rather than Englishmen, when the victories of Philip II of France forced them to make a proclamation of allegiance to France.) Since disavowal of a feudal bond was a felony, lords could escheat land from those who refused to perform their feudal services. On the other hand, there were also tenants who were merely sluggish in performing their duties, while not being outright rebellious against the lord. Remedies in the courts against this sort of thing, even in Bracton's day, were available, but were considered laborious and were frequently ineffectual in compelling the desired performance. The commonest mechanism was distraint, also known as distress (districtio), whereby the lord would seize chattels or goods belonging to the tenant, to hold until performance was achieved. This practice had been addressed in the 1267 Statute of Marlborough. Even so, it remained the most common extrajudicial method applied by overlords at the time of Quia Emptores.[4]
Thus, under English common law, there were two main ways an escheat could happen:
- A person's lands escheated to the immediate overlord if he was convicted of a United States Constitution, which states that attainders for treasondo not give rise to posthumous forfeiture, or "corruption of blood".
- If a person had no bona vacantiaor a similar concept.
Procedure
From the 12th century onward, the Crown appointed escheators to manage escheats and report to the
Current operation
Most common-law jurisdictions have abolished the concept of
The term is often now applied to the transfer of the title to a person's property to the state when the person dies
Similarly, under
In some jurisdictions, escheat can also occur when an entity, typically a bank, credit union or other financial institution, holds money or property which appears to be unclaimed, for instance due to a lack of activity on the account by way of deposits, withdrawals or any other transactions for a lengthy time in a cash account. In many jurisdictions, if the owner cannot be located, such property can be revocably escheated to the state.
In commerce, it is the process of reassigning legal title in unclaimed or abandoned payroll checks, insurance payouts, or stocks and shares whose owners cannot be traced, to a state authority (in the United States). A company is required to file unclaimed property reports with its state annually and, in some jurisdictions, to make a good-faith effort to find the owners of their dormant accounts. The escheating criteria are set by individual state regulations.
England and Wales
Bankruptcies and liquidations
Escheat can still occur in
Although such escheated property is owned by the Crown, it is not part of the
Registration of Crown land
One consequence of the Land Registration Act 1925 was that only estates in land (freehold or leasehold) could be registered. Crown land, i.e., land held directly by the Crown – also known as property in the royal demesne –, is not held under any residual feudal tenure (the Crown has no historical overlord other than, for brief periods, the papacy), and there is therefore no estate to register. This had the consequence that freeholds which escheated to the Crown ceased to be registrable. This created a slow drain of property out of registration, amounting to some hundreds of freehold titles in each year.
The problem was noted by the
United States
Transfer agents and escheatment
Escheatment is the process of returning lost or unclaimed property to the government of a state, for safekeeping until the owner is identified. Geographic jurisdiction of the state is determined by the last known address of the original owner. Each of the United States has laws regulating escheatment, with holding periods typically ranging around five years. The legal principle behind escheatment is that all property has a legally recognized owner. Therefore, if the original owner cannot be found within a specified time, the government is presumed to be the owner.[5]
Escheats are performed on a revocable basis. Thus, if property has escheated to a state but the original owner subsequently is found, escheatment is revoked and ownership of the property reverts to that original owner.
According to SEC Rule 17 CFR 240.17f-1: Transfer agents are obligated by the SEC to report to the commission (specifically to its designee; the SEC's Securities Information System) anytime a certificate is known to be lost or missing for at least two days.[6] Transfer Agents must search for the holder's SSN or EIN utilizing an information database system, or if not available, exercise their best effort to match the holder's name and address through these systems. All transfer agents must report all lost or missing certificates/shareholders on their own annual filings.[7]
See also
- Bona vacantia
- Breakage
- Doctrine of lapse
- History of the English fiscal system
- Intestacy
- Quia Emptores
Sources
- S. T. Gibson, "The Escheatries, 1327–1341", English Historical Review, 36(1921).
- John Bean, The Decline of English Feudalism, 1215–1540, 1968.
References
- ^ "Escheat". Retrieved 2 November 2011.
- ISBN 9781402171710.
- ^ Collins Dictionary of the English Language, London, 1986, p.520
- ^ Pollock and Maitland, History of English Law, Vol 1, pp. 355–366, Cambridge University Press, 1968
- ^ Investopedia Staff (18 November 2003). "Escheat". Investopedia. Retrieved 26 January 2018.
- ^ "17 CFR 240.17f-1 - Requirements for reporting and inquiry with respect to missing, lost, counterfeit or stolen securities". LII / Legal Information Institute. Retrieved 26 January 2018.
- ^ "Escheatment". Retrieved 26 January 2018.