There are very few things that can be said that are the same for every jewelry store out there, but one of them is that if you ask and dig around at the very back of the safe, you will find a box.
Not just any box. A box that holds old repairs that were never picked up. this might be a cardboard, plastic, or even a wood box like a cigar box. But inside will be old repairs, the names might not even be readable anymore due to being decades old. These repairs represent labor that you, as a business owner are not getting paid for.
For a small business owner, this box is a potential bomb. There are many things that must be considered before disposing of unclaimed property.
First, what are your State, County and local laws? Most of the time you only have to worry about State laws, but you need to check and make sure.
Second, how long do you need to hold unto these items before you can dispose of them? Depending on your state, for “Tangible Personal Property”, such as a diamond ring or a silver coin, this time can be from 1 to 15 years. In Wisconsin, for the most part, it is 5 years.
The Wisconsin Code that defines the uniform unclaimed property act is Chapter 177 ( https://docs.legis.wisconsin.gov/statutes/statutes/177/ ). I will try and brake this down to what is important to jewelers in Wisconsin. If you live in another state this should still work but check your state website for any changes.
First, we have to define “Tangible Personal Property”.
Basically, when someone leaves an item to be repaired, that is their “Tangible Personal Property”. AKA you can hold it in your hand.
Second, what Is Unclaimed Property?
Unclaimed property is generally any financial asset that belongs to an individual, business, or governmental entity that hasn’t had owner activity for the dormancy period applicable to the property type and the holder is unable to contact the owner. (In your case, a repair and it has no activity from the owner for at least 5 years.)
AN item sold by you or your store is not much of a problem. New unclaimed merchandise can be refunded and the money held as unclaimed while the item can be rotated through as stock again. If the person comes in during the next 5 years, you can issue them a refund. easy peasy!
The issues arise when the item was not provided by you.
I am going to use a gold and garnet ring for my example. This example ring we will say came in for a simple sizing. The client received it as a gift, and for value, she agreed to a worth of approximately $170 for a ballpark.
After the sizing is done, the customer is called several times, and several attempts to contact the owner, it eventually makes it way to the last divider in the repairs box where it sits for a while before making its way to that box in the safe with several notes scribbled on it about “Unable to contact client”. So that $45 sizing has to be eaten by the store at the end of year for accounting purposes. But you have an item that is not yours worth much more than the value of the work provided.
After a while, you want to pull this you have to inventory it, you have to make sure your store insurance covers it, you have to make sure the sales staff is aware of it in the safe just in case somebody comes to claim it, and so on. In Wisconsin, the law requires holders (you) to review their financial records each year to determine whether they hold any tangible property (the ring) that has had no owner activity for the required dormancy period for the property type. In this case 5 years. My suggestion is to wait an additional year to be safe.
Why did the owner never come forward? They forgot about the repair? died? moved? Went to jail?
In six years, you can now dispose of the item. But this is where it gets tricky. This is where you need to send out a ‘signature required’ Due Diligence letter to the address on the repair. I suggest also putting a listing in the paper twice looking for the name on the repair envelope, and doing a search of obituaries as well. Make sure your lawyer has been consulted to make sure you are doing everything correctly.
(The letter sample is at the bottom of the blog post.)
In Wisconsin, unclaimed property goes to the Department of Revenue where it is then recorded and sold at auction. I have never seen this done. All of the unclaimed repairs I have seen at various stores have all been deconstructed for component parts and scrap metal value.
Make sure you record all of this information and keep a record of an appraisal for the item before disposal.
This is to protect yourself legally as the owner may show up at some future time and decide to sue the store over her “$17,000” ruby ring that you took apart for scrap.
Did you notice that little test I just threw at you?
How much is the ring worth? What you say and what the owner says are different, and in a court of law, you will probably lose 95% of the time. This is why you appraise the item and keep records of everything.
Follow these guidelines, make sure you record everything, and keep your lawyer in the loop and you should be ok for disposing of unclaimed property left at your store.
As always, you can comment below, or email me at firstname.lastname@example.org for more information.
SAMPLE DUE DILIGENCE LETTER
CITY, STATE ZIP
DUE DILIGENCE LETTER FOR UNCLAIMED PROPERTY
REFERENCE # (THIS WILL BE YOUR REPAIR NUMBER)
Our records indicate you appear to be the owner of the property listed below. No transaction or other activity has been noted for a significant amount of time.
Description from job envelope
If you have an interest in this property and wish to claim it
before it is sold to recoup monies owed for work done, please contact:
Store contact and email
City, State Zip
If satisfactory proof of claim is not presented by DATE, 20XX, the property may be sold to recoup monies owed including, but not limited to labor and materials, storage, and legal fees. This letter serves as final notice of our Due Diligence in this matter.
(Signature of company owner)