Resolving Unclaimed Property in Illinois

What You Should Know about State Treasurer and ARDC Procedures

Christine Sparks photoEDITOR'S NOTE: ATG thanks Jerome Larkin, ARDC Administrator, for his contributions to this article.

Many attorneys have real estate trust accounts that have been open for a significant number of years. In the course of business, there are times when a check does not clear and the funds remain in the account. If too much time passes, sometimes the attorneys no longer have the necessary documentation to determine who is entitled to the funds. Then, when attempting to clean-up the escrow account, they contact us asking for guidance on what to do with remaining funds.

Pursuant to the Unclaimed Property Act, most attorneys are required to file an annual report with the Illinois State Treasurer's office (Treasurer) advising of any unclaimed property that is being held. See Reporting Requirements under the Uniform Disposition of Unclaimed Property Act for more information on when to file a report and what information to provide. The Treasurer has a program in place where money can be remitted pursuant to a Voluntary Disclosure Agreement (VDA). In the case of a VDA, the Treasurer will not pursue fees, penalties, and interest that may have accrued because of a failure to file a report or remit funds in the past. The Treasurer's office has indicated that it is obligated to take in the money even when it is unknown who is entitled to the money.

Rule 1.15 of the Professional Rules of Conduct requires that three-way reconciliations be performed quarterly. See the ARDC's Client Trust Account Handbook, which provides guidelines for maintaining escrow accounts. The ARDC has not received, and would not expect to receive, reports from the Treasurer arising from its receipt of unclaimed funds, as the remittance of such funds would not ordinarily suggest improper handling of those funds.

ATG and ALTA Best Practices require members to perform monthly three-way reconciliations on their escrow accounts. Part of the monthly three-way reconciliation is maintaining an accurate trial balance that accounts for all money in the escrow account. To comply with this ATG and ALTA requirement, members must first resolve unclaimed property.

ATG Member Agents: ATG is committed to ensuring its members comply with applicable law; by providing clear instruction and information, we believe we are offering the resources to do so. If you have any questions please Contact an Underwriter.

Christine Sparks
ATG Vice President and Managing Attorney, Audit Department

Posted on: Wed, 08/27/2014 - 10:42am