Getting your car towed is already one of those experiences that ruins your entire week. The stress of figuring out where it went, scrambling to find a ride, and bracing for the inevitable fees is bad enough. But for people already living on tight budgets, a towed vehicle can spiral into a genuine financial catastrophe fast. Towing fees, daily storage charges, and administrative costs stack up quickly, and before long, retrieving the car costs more than the vehicle is even worth.
When that happens, many owners simply walk away. The car eventually gets sold at auction to cover what was owed, and life moves on. Or so those owners assumed. What they likely did not know is that California’s Department of Motor Vehicles had been pocketing any money left over after those auctions, with no legal obligation to tell anyone that extra cash was sitting there waiting to be claimed.
That practice went on for years, quietly and legally, until it came to light recently. Now a state lawmaker is pushing to change the rules so that vehicle owners are actually told when the government is holding onto money that rightfully belongs to them. The fix being proposed is so basic and sensible that it almost raises the question: why was this not already the law?
State Sen. Kelly Seyarto has introduced a bill targeting what he describes as a significant gap in California’s consumer protection framework around the tow-and-auction process. If it passes, the DMV would be required to actively notify former vehicle owners when surplus auction funds are available for them to claim, rather than simply waiting out the clock until the money becomes the state’s to keep permanently.
How the System Actually Worked Against Car Owners
Here is how the situation played out in practice. A car gets towed and ends up in an impound lot. The owner, unable to cover the fees, never retrieves it. After a certain period, the DMV auctions the vehicle off to recoup what was owed. If the auction brings in more than the outstanding debt, which it sometimes does, the extra money technically belongs to the previous owner.
The problem is that the DMV had no requirement to reach out and say so. Owners had three years to claim surplus funds, but the state was under no obligation to tell them those funds existed. If no claim was made in that window, the money went to the state permanently. It was essentially a quiet wealth transfer from people who often could not afford to get their car out of impound to the state government.
According to reporting from CalMatters, the DMV collected more than $8 million in surplus auction proceeds from roughly 5,300 vehicles between 2016 and late 2024. That is not a rounding error. That is a substantial amount of money that belonged to private individuals and was never returned or even flagged.
What the New Bill Would Actually Require
SB 1029 would require the DMV to send certified notice within 14 days of receiving lien sale proceeds, informing the registered owner that surplus funds may be available and providing instructions on how to file a claim. pic.twitter.com/E9ZbQRLgN4
— Senator Kelly Seyarto (@SenatorSeyarto) March 5, 2026
Sen. Seyarto’s bill takes a straightforward approach. Under the proposed legislation, the DMV would have 14 days following a vehicle auction to send a certified letter to the former owner explaining how much surplus money is available and how to go about claiming it. That is pretty much it. No complicated bureaucratic machinery, no new agency, no years-long phase-in period. Just a letter.
The bill has moved toward a Senate Appropriations Committee hearing with no reported opposition so far. That kind of smooth early progress suggests lawmakers across the aisle recognize this for what it is: a common-sense correction to a process that was never designed with the seller in mind.
To its credit, after the underlying story gained public attention, the DMV did launch an online tool allowing people to check whether they have any unclaimed auction surplus funds on file. That is a reactive step, sure, but it shows the agency is at least capable of doing the right thing when enough eyes are watching.
What We Can Learn From This Situation
There is a broader lesson buried in this story that goes beyond towing policy. Governments at every level hold enormous amounts of unclaimed funds, ranging from forgotten utility deposits to dormant bank accounts to, apparently, car auction proceeds. In most cases, individuals are not proactively told that money is waiting for them. The burden falls entirely on the citizen to know the right questions to ask and the right places to look.
This creates an inherently unequal system. People with financial resources and savvy advisors are more likely to track down what is owed to them. People who are already stretched thin and navigating housing instability, job loss, or transportation crises are the least equipped to chase down government databases. It is worth asking, whenever these situations surface, whether the absence of a notification requirement is truly an oversight or simply a convenient default that benefits the state.
California is far from alone in running unclaimed property programs. Every state has one. But transparency varies wildly, and proactive outreach is rarely the default. This bill, if signed into law, would set a useful precedent that the state has an affirmative duty to return surplus funds, not just a passive willingness to do so if someone happens to ask.
How to Check If California Owes You Money
If you or someone you know has had a vehicle towed and auctioned in California over the past several years, it is worth doing a quick check. The DMV’s new online tool is a starting point, but California also operates a broader unclaimed property database through the State Controller’s Office at claimit.ca.gov, which covers everything from old paychecks and utility deposits to, potentially, vehicle auction proceeds.
The process takes only a few minutes and costs nothing. Given that the state collected over $8 million in surplus funds from fewer than 5,500 vehicles, the average per-vehicle amount is not trivial. Some of that money may belong to people who have spent years assuming there was nothing left to recover.