California lawmakers advanced a bill that would change how the state handles money from lien sales of towed vehicles, requiring the California Department of Motor Vehicles to notify owners when auctions generate surplus proceeds.
The measure, introduced by Republican state Sen. Kelly Seyarto, would require DMV to send owners a notice within 14 days of the department receiving surplus auction proceeds. The bill would also require that the notice include the amount of surplus and instructions on how an owner can claim the money, according to a bill analysis written for the Senate Transportation Committee.
The legislation would direct DMV to send the notification by certified mail with a return receipt, a step designed to create a documented record that the owner received information about the surplus. Under the bill’s approach, the notification would be tied to the specific moment the DMV receives the excess proceeds, rather than relying on owners to learn about a sale on their own.
Support for the bill follows a reporting effort from CalMatters, which found the DMV collected more than $8 million from nearly 5,300 cars sold at auction from 2016 to late 2024 without having to notify owners that their towed vehicles had been sold for a surplus. A Senate Transportation Committee bill analysis said the reporting raised concerns that the process to recoup excess funds after a lien sale is opaque and that many people do not know whether the sale resulted in excess money.
The bill analysis also described a deadline problem for vehicle owners under current state law. It said state law does not require the agency to tell people they could claim surplus proceeds, and after three years, owners lose their right to the money. The analysis connected the issue to how towing and fees can create a cycle that leaves owners unable to pay what they owe and, as a result, leaving vehicles at storage yards for auction.
Lien sales are used when owners do not pay and pick up vehicles held by storage yards, towing companies, or car repair shops. In those cases, the vehicles can be auctioned to recoup costs, and the bill would add a notification requirement when surplus proceeds are involved.
A CalMatters tool that helps people claim their money is now available on the DMV’s website, and the website also includes an FAQ on how to claim surplus proceeds. The bill being considered by lawmakers would create an additional step, requiring direct owner notification when DMV receives surplus funds from the auctions.
The measure has no registered support or opposition, according to the bill analysis. A hearing for the bill is scheduled for Monday in the Senate Appropriations Committee.