Who really owns all of your stuff? It’s comforting to think that everything that we have in our possession, acquired by legal means, belongs to us. That’s not always the way it works, however.
The myth of ownership is expected to apply to people who buy their possessions with credit and can’t afford to keep up with the debt payments. Default on your car loans, and the bank will come and repossess the car — that the bank owns, not the driver. Ignore your mortgage payments for long enough, and the bank will foreclose on your house. The typical American dream of owning a piece of property is rarely achieved because so few families truly own their homes.
Putting aside debt, there are situations when even full ownership doesn’t guarantee you can keep what is yours. The myth of ownership applies even when no debt is involved.
The first example is the process of escheatment by your state. Property considered abandoned can be claimed by the state in which you live or in which the property resides. Savings accounts and insurance policies are some of the more common financial items escheated. If a bank or insurance company can’t contact the owner, they will hand over the funds to the state.
The owner has a chance to recover the funds from the state, but it involves a process initiated by the owner who may not even be aware that the property exists. If you think there might be something of yours out there, start the process here. Most unclaimed property will remain unclaimed — and the states count on this when they plan their budgets and spending plans.
The Supreme Court of the United States has ruled that states can exercise eminent domain in any situation where the state can prove that doing so would provide an economic benefit, and states can transfer that power to a private entity to exercise on its behalf. The result is that even homeowners who have no debt could find that the state will encourage them to leave. The state would offer reimbursement, but would act without the owner’s consent. Traditionally, highways and utilities are the reasons cited for seizure through eminent domain, but in the current legal environment, homes could be seized to make way for malls and sports arenas.
Eminent domain is one of the biggest examples of how our property doesn’t necessarily belong to us. On a smaller scale, New Jersey is now going after unused gift cards. Merchants and gift card issuers like Visa and American Express love unused gift cards. They’ve received the cash and haven’t had to provide any product. They have the most to lose by the state’s legislative decision to require issuers to forfeit the balance on unused cards after a relatively short time period. This decision was overturned in court, but the state is appealing that decision.
When our property can be relatively easily be taken from us by the state, is it really our property?
Hat tip: Darwin’s Money