California DMV Faces Scrutiny Over Unclaimed Auction Surplus Funds; New Bill Aims to Fix Notification Gap

The California Department of Motor Vehicles (DMV) auctioned more than 5,300 vehicles between 2016 and late 2024 to recover unpaid debts, but kept surplus auction proceeds without notifying owners—a practice now under scrutiny.

Under current state law, when a vehicle is towed and auctioned to settle a lien, any proceeds exceeding the owner’s debt are held by the DMV. If unclaimed within three years, the surplus funds are forfeited permanently. The DMV has never been required to notify owners of these surplus funds, leaving many unaware they may be owed money.

New Legislation Aims to Close Consumer Protection Gap

State Senator Kelly Seyarto has introduced SB 1029, a bill designed to address this long-standing issue by mandating that the DMV notify vehicle owners within 14 days of a lien sale if surplus funds are available. The notification must be sent via certified mail and include instructions on how to claim the money.

"This is a serious consumer-protection gap in California’s lien sale process. Ensuring that vehicle owners are actually notified when the state is holding surplus auction proceeds that belong to them is critical."

According to reporting from CalMatters, the DMV collected over $8 million from these auctions over the past eight years without ever contacting the rightful owners. The proposed legislation seeks to rectify this oversight by establishing clear, timely communication requirements.

DMV Launches Reactive Online Tool After Public Outcry

In response to growing concerns, the DMV has since launched an online tool allowing owners to check if they are owed surplus funds from past auctions. While this initiative is a step forward, critics argue it is a reactive measure that does not address the core issue of proactive notification.

The bill has gained bipartisan support and is currently headed to the Senate Appropriations Committee with no opposition, increasing its likelihood of passage.

Key Details of SB 1029

• Notification Requirement: DMV must send certified mail within 14 days of receiving lien sale proceeds.
• Content of Notice: Must inform owners of available surplus funds and provide claim instructions.
• Deadline for Claim: Owners have three years to claim funds before they are forfeited.