Real Estate & Property Law

Ninth Circuit: No Taking of Interest on Abandoned (Escheated) Property

By Robert Thomas (inversecondemnation.com)

You snooze, you lose.  That's the lesson from Turnacliff v. Westly, No. 07-15287 (Oct. 15, 2008), where the Ninth Circuit rejected a claim that California's escheat statute, which sets a rate for interest on abandoned property, violated the Takings Clause.  The owner whose abandoned property was eventually returned (with statutory interest) claimed that the state had a constitutional obligation to use some form of market rate for calculating the interest.

The court assumed the existence of a property right in interest earned on escheated property, but held that because that property itself had been abandoned, the owner had forfeited any property claim in the interest on the property.  The owner got its money back, with interest, and the court held the owner

. . . has no Fifth Amendment right to "actual" or "constructive" interest earned by its property while held by the State; California need not further compensate the Estate for the consequences of the Estate?s neglect.

Slip op. at 14560.  The takings analysis starts at page 14558 of the slip opinion.

Full post as published by inversecondemnation on October 15, 2008 (boomark / email).