Alabama Abandoned Property Laws: Dormancy, Reporting, and Notice

Alabama’s abandoned property laws, codified in the Uniform Disposition of Unclaimed Property Act, require banks, employers, insurers, and other businesses holding dormant assets to send owner notices, file an annual report with the State Treasurer by November 1, and remit the property once the statutory dormancy period has run. Dormancy is usually three years, but it ranges from one year for unpaid wages to fifteen years for traveler’s checks. Comply in good faith and the state indemnifies you against later owner claims; ignore the obligation and you face audit exposure that can reach back well over a decade.

When Property Is Considered Abandoned

Alabama Code Section 35-12-72 presumes property abandoned after a set number of years of inactivity. The clock starts from a trigger event that depends on the property type, and it resets whenever the owner shows interest.

Bank Accounts and Deposits

Demand deposits, savings accounts, and time deposits, including automatically renewable CDs, are presumed abandoned three years after the earlier of the account’s maturity date or the last indication of owner interest. A deposit, withdrawal, or even a phone call to the bank about the account counts and restarts the clock.¹

Retirement Accounts

IRAs, defined benefit plans, and other tax-deferred accounts are presumed abandoned three years after the earliest of three dates: when a distribution was made or attempted, the required distribution date in the plan agreement, or the IRS-mandated distribution date needed to avoid a tax penalty.² A participant who has reached the required beginning date and stopped responding to the custodian can trigger the three-year window faster than expected.

Securities

Stock and other equity interests are presumed abandoned three years after the earlier of two dates: the most recent unclaimed dividend, stock split, or other distribution, or the second returned mailing of an account statement or notice. If the holder stopped sending mail altogether, that date is the trigger.¹

Life Insurance and Annuities

Amounts owed on a matured or terminated life insurance policy, endowment, or annuity are presumed abandoned three years after the payment obligation arose. For policies payable upon proof of death, the three-year period starts when the insured reaches (or would have reached) the limiting age under the mortality table used to calculate reserves.¹ Property from an insurer demutualization becomes abandoned after two years rather than three.

Safe Deposit Boxes

Contents of a safe deposit box, and any proceeds from a lawful sale of those contents, are presumed abandoned three years after the lease or rental period expires.¹

Wages and Utility Deposits

Unpaid wages and other personal-service compensation are presumed abandoned just one year after they become payable. Utility deposits or refunds owed to subscribers follow the same one-year rule.¹

Money Orders and Traveler’s Checks

Money orders are presumed abandoned five years after issuance. Traveler’s checks carry the longest window at fifteen years.¹

Gift Certificates

Non-exempt gift certificates are presumed abandoned three years after June 30 of the year they were sold. If the certificate is redeemable only for merchandise rather than cash, the abandoned amount is 60 percent of face value.¹

What Counts as Owner Activity

A single qualifying act by the owner resets the entire dormancy period, so knowing what qualifies matters as much as knowing the deadlines.

For financial accounts, deposits, withdrawals, and any owner-directed change to the account’s contents count. Presenting a dividend check or other distribution instrument for payment counts. Written correspondence from the holder to the owner also counts, provided the mail was not returned as undeliverable, which means routine account statements that reach the customer are themselves evidence of ongoing interest.¹

For insurance policies, premium payments count, including payments made through automatic premium loans or nonforfeiture provisions.

One detail catches holders off guard. Activity on any account an owner holds with the same institution can count as interest in all of that owner’s accounts. Transactions in a customer’s checking account can prevent that same customer’s dormant savings account from being classified as abandoned.²

Property and Holders That Are Exempt

Not everything falls under the Act. Section 35-12-73 exempts electric cooperatives organized under Title 37, along with incorporated municipalities and municipal and county boards, from reporting obligations entirely.

Two types of property are also exempt: gift certificates, gift cards, and in-store merchandise credits issued by retailers, and property held in a foreign country arising from a foreign transaction.²

The retail gift card exemption is broader than it looks. A business that primarily sells tangible goods at retail and issues store-branded gift cards keeps those cards out of the unclaimed property pipeline entirely. General-purpose gift certificates redeemable for cash or across unrelated businesses do not qualify and fall back under the three-year rule with the 60 percent valuation for merchandise-only cards.

Holder Reporting Steps and Deadlines

Compliance breaks into three phases: owner outreach, the annual report, and remittance.

Send Owner Notice at Least 60 Days Before Filing

At least 60 days before filing the annual report, a holder must send written notice to each apparent owner at their last known address, stating that the holder has property presumed abandoned. No written notice is required if the holder has no address on file or if the property is worth less than $50.³

The $50 exception only excuses the mailing. Sub-$50 items still have to appear on the report and still have to be remitted.

File the Annual Report by November 1

Every holder files an unclaimed property report with the State Treasurer on or before November 1 each year. The report covers the twelve-month period ending the previous July 1, plus any property from earlier years that was not previously reported. Holders needing extra time, or an exception to electronic filing, must submit a written request to the Treasurer’s Office at least 15 days before November 1.⁴

The report must include detailed information about each property item, the apparent owner’s identity, and all contact information available in the holder’s files.⁵

Extra Steps for Securities Holders

Transfer agents, brokers, and dealers face a federal layer on top of state law. SEC Rule 17Ad-17 requires two database searches for any lost securityholder: the first within three to twelve months of losing contact, the second six to twelve months after that. The searches must use a nationwide database covering at least half the U.S. adult population, and the securityholder cannot be charged. Exceptions apply where the holder is deceased, the account holds less than $25, or the account belongs to an entity rather than an individual.⁶

Records You Must Keep

Alabama Code Section 35-12-90 requires holders to keep all records supporting their unclaimed property reports for 10 years after filing. The Treasurer can shorten this by rule, but ten years is the default.⁷

Issuers of traveler’s checks, money orders, and similar instruments on which the issuer is directly liable follow a three-year rule for records showing state and date of issue, but those records must be maintained for as long as the instruments remain outstanding.⁷

If the state audits your practices years later, those records are what let you push back on estimated liability. Holders who cannot produce documentation typically get hit with extrapolation methods that inflate exposure from small samples.

Liability Protection After You Deliver

Section 35-12-77 shields a holder, transfer agent, or other person acting on the holder’s behalf who delivers property to the Treasurer in accordance with the statute. That party is not liable to the apparent owner and is indemnified against claims under Section 35-12-79.⁸

Once you comply, the state effectively takes over as custodian. Owners who later come looking deal with the Treasurer, not with you. The protection turns on good faith compliance; knowingly filing false reports or ignoring obligations forfeits the shield.

Multi-State Priority Rules

Holders operating across state lines need to know which state receives the property. The U.S. Supreme Court settled this in Texas v. New Jersey, and the rules operate as federal common law that overrides any state statute.

The primary rule sends property to the state of the owner’s last known address in the holder’s books and records. If there is no address, or the owner’s state does not provide for escheat of that property type, the fallback rule gives jurisdiction to the state where the holder is incorporated.⁹

An Alabama-based business reports property to whichever state the owner’s last address is in, not automatically to Alabama. Accurate address records keep any given item within a single state’s claim.

Audit Exposure

Unclaimed property audits do not resemble tax audits. States frequently hire third-party contract auditors who may represent dozens of jurisdictions simultaneously, so one firm can examine your books on behalf of thirty or more states at once. Auditors typically review the entire chart of accounts rather than a specific return, and lookback periods commonly stretch fifteen years or more.

Where records are incomplete, auditors use estimation. They identify a base period with clean transaction-level data, calculate an error rate, and apply that rate to revenue from years without records. A small sample of actual unclaimed items can produce a large liability figure. Holders with documented compliance history are in a much stronger position to challenge inflated estimates.

How Owners Reclaim Property

Alabama does not put a deadline on the owner’s right to come forward. Under Section 35-12-88, even if a contract, statute, or court order imposed a limitations period on the owner’s claim, that expiration does not prevent the property from being presumed abandoned and does not extinguish the owner’s right to recover it from the state.¹⁰

Owners search and file through the Alabama State Treasurer’s unclaimed property portal. Claims require identity verification and documentation matching the original holder’s records. Once property has been sold at public auction, which the Treasurer generally conducts within three years of taking custody, the owner’s right converts from a claim to the specific asset into a claim to the cash proceeds.¹¹

1
Alabama Legislature. Alabama Code 35-12-72 – Presumption of Abandonment
2
Alabama State Treasury. Alabama Uniform Disposition of Unclaimed Property Act
3
Alabama State Treasury. Reporting Instructions for Business Reporting and Remitting of Unclaimed Property
4
Alabama State Treasury. Alabama Unclaimed Property Program Rules
5
Alabama Unclaimed Property – Official State Website. Reporting Guidelines
6
eCFR. 17 CFR 240.17Ad-17 – Lost Securityholders and Unresponsive Payees
7
Alabama Legislature. Alabama Code 35-12-90 – Retention of Records
8
Justia. Alabama Code 35-12-77 – Payment or Delivery of Abandoned Property
9
Justia U.S. Supreme Court Center. Texas v. New Jersey, 379 U.S. 674
10
Alabama State Treasury. Alabama Uniform Disposition of Unclaimed Property Act of 2004
11
Alabama Legislature. Alabama Code 35-12-80 – Public Sale of Abandoned Property