17 Pub. 11 2022 Issue 3 Nationwide, every day of every year, safe deposit box rental payments become delinquent. At what point should the financial institution intervene? Specific state and federal regulations and nationally accepted procedures, letters, affidavits, and notices are necessary when you notify a renter or take legal action when his box rent is overdue. First, the financial institution must mail an annual box-rental-due notice. The second step would be a friendly 10-day rent-due reminder, then a 30-day past-due notice and finally, a properly worded, legal demand-for-payment letter must be mailed with the required federal (SCRA) regulatory notice included. If none of these efforts bring forth a payment or response, the financial institution has no other recourse. The box should be drilled, and its contents (if any) inventoried and impounded. Most delinquent boxes are often found to be empty. To avoid potential liability, strict procedures dictate the handling of confiscated box contents. To illustrate the pitfalls of following flawed or careless procedures, let’s examine a past-due box situation that occurred at a small financial institution: After taking appropriate actions to notify a renter that his box rental payment was long overdue, and when no response was forthcoming, the box was drilled. The contents were inventoried, listed in detail, and the institution took possession of the items. So far, so good – right? Wrong! The items were placed in a manila envelope and stored in an unlocked file cabinet. This is where the problems began. One day, 18 months later, the renter showed up to claim his property. He watched the safe deposit attendant walk across the lobby, open an unlocked file cabinet and remove a large envelope. The observant (perhaps dishonest) box renter examined the envelope’s contents, frowned, and slammed the envelope on the attendant’s desk. “This is not my stuff!” he bellowed. He asserted that a valuable coin collection was missing. Worthless coins had been substituted for his collection, and the financial institution’s inventory list was bogus. The unhappy and irate renter retained legal counsel and filed a lawsuit. After lengthy legal maneuvering by both sides, the lawsuit went to trial. During the trial, the emotional renter claimed the missing coins represented his total life savings. The financial institution testified that the box was indeed drilled, and the renter was properly notified his box rental payment was long overdue. His box contents had been inventoried and listed. Then the institution had to admit that these items had been placed in a manila envelope and left in an unsecured file cabinet for 18 months. The jury, moved by the renter’s pitiful testimony and disgusted by the institution’s lackadaisical attitude toward the safekeeping of his property, found in favor of the plaintiff to the tune of $107,000. The financial institution attorney’s subsequent appeal was unsuccessful and cost the institution an additional $80,000 in legal fees. Because the institution did not have a satisfactory defense during either trial, this expensive second attempt was predictably futile. Poor Drilling Procedures Create “Rich” Box Renter by David P. McGuinn , President, Safe Deposit Specialists Continued on page 18
RkJQdWJsaXNoZXIy ODQxMjUw