NY Law Is Clear On A Business’s Obligations Regarding Uncashed Distributions | Rivkin Radler LLP
Recently, a client came to us seeking advice on how to handle a large volume of uncashed distribution checks the client issued to its members over the past decade. Although not widely known, New York maintains an entire section of statutes, New York Abandoned Property Law, which addresses this very issue.
Under New York Abandoned Property Law, uncashed distributions become abandoned property after 3 years. See New York Abandoned Property Law § 501. New York businesses are not permitted to retain abandoned property, including uncashed distribution funds. See New York Abandoned Property Law § 502. Instead, the issuing business is required to remit the abandoned uncashed distribution funds to the State Comptroller. See id.
If a business fails to remit abandoned uncashed distribution funds to the State Comptroller, the business exposes itself to various legal consequences. First, it faces financial liability, and that financial…
