Gov. Newsom vetoes bill on DMV excess towed car funds
California Governor Gavin Newsom vetoed a bill this week that would have required the Department of Motor Vehicles to transfer excess proceeds from towed car lien sales to the state Controller’s Office, keeping a practice intact that allowed the agency to retain millions of dollars without notifying vehicle owners, CalMatters reported.
Governor Cites Administrative Divisions in Veto Decision
The vetoed legislation, authored by state Senator Kelly Seyarto, a Republican from Murrieta, passed through the state Legislature before reaching the governor’s desk. Senator Seyarto’s bill aimed to classify surplus funds from towed vehicle auctions as unclaimed property. Governor Newsom defended his decision in an official statement, pointing to structural flaws in the proposal. “I support the author’s goal of helping vehicle owners recover excess proceeds that rightfully belong to them,” Newsom wrote in his veto statement. “However, this bill divides responsibility between two state agencies without establishing a clear process.”
The governor argued that the legislation would create new administrative expenses without guaranteeing that more funds would successfully reach vehicle owners. Instead of the legislative mandate, Newsom emphasized that the DMV has implemented a digital lookup tool designed to help car owners determine if the state owes them money. This online resource mirrors a database originally developed and deployed by CalMatters journalists.
Financial Scale of Unclaimed Towed Car Proceeds
The DMV’s handling of surplus funds drew intense public scrutiny following a detailed CalMatters investigation. Under existing California law, when motorists cannot afford mounting towing and storage fees, they frequently abandon their vehicles at storage yards. These yards conduct lien sales to recover outstanding debts. While most individual lien sales fail to cover the full cost of storage and towing fees, the aggregate surplus remains substantial.
The investigative findings revealed that the DMV collected more than $8 million in excess proceeds from nearly 5,300 vehicles sold at auction between 2016 and the fall of 2024. Current regulations do not obligate the agency to actively notify motorists that surplus cash is available for collection. Vehicle owners forfeit all legal rights to claim their money after a strict three-year window closes.
Lawmakers Removed 14-Day Notification Requirement from Bill
Earlier iterations of Senator Seyarto’s bill carried much stricter provisions for state accountability. As originally drafted, the measure would have mandated that the department notify vehicle owners within 14 days of receiving any financial surplus from a lien sale. Lawmakers removed this specific 14-day notification requirement during subsequent amendments in the legislative process, altering the ultimate scope of the bill before it reached the governor.