California Gov. Gavin Newsom has vetoed legislation that would have changed how money left over after certain towed vehicles are sold is handled. The bill passed by the Legislature would have moved unclaimed proceeds from the Department of Motor Vehicles to the state’s unclaimed-property system after the existing three-year claim period expired.

Under California law, a vehicle can be sold when its owner does not pay the associated towing and storage costs. The sale proceeds first cover those expenses. Any remaining money belongs to the former owner, who can claim it for up to three years.

If the money is not claimed during that period, it can ultimately remain with the DMV under the current system. An investigation by CalMatters found that the agency collected more than $8 million in excess proceeds tied to nearly 5,300 vehicles from 2016 through the fall of 2024.

What the bill would have changed

State Sen. Kelly Seyarto introduced SB 1029 after the issue gained attention. The original version would have required the DMV to send former owners certified notices within 14 days, explaining that surplus money was available and how to request it.

That notification requirement was removed during the legislative process. The version ultimately sent to Newsom retained the three-year claim period but would have transferred unclaimed funds to the California Controller after that deadline. The money would then have been managed through the state’s broader unclaimed-property system.

Newsom’s veto therefore addressed the final transfer proposal rather than the certified-notice system described in the original version of the legislation.

Concerns over agency responsibilities and costs

In his veto message, Newsom said he supported efforts to help vehicle owners recover excess proceeds that belong to them. However, he argued that the bill did not clearly define how the DMV and Controller’s Office would divide responsibility for verifying ownership, reviewing claims, and making final eligibility decisions.

The governor also cited potential administrative costs. He said moving the funds would create additional expenses for the Motor Vehicle Account, which supports DMV and California Highway Patrol operations. He also said the legislation did not show that the proposed change would lead to more former owners successfully receiving their money.

As a result, California’s existing process largely remains in effect. Former owners generally still have three years to claim surplus funds after a vehicle is sold to cover unpaid towing and storage charges.

DMV adds an online search tool

The DMV has introduced one new resource since the issue came to light: an online lookup tool for surplus proceeds from lien-sale vehicles. Former owners can use the system to check whether money may be waiting for them.

Newsom specifically referenced the lookup tool in his veto message. Although the bill will not change how unclaimed funds are transferred after three years, the online search gives eligible former owners a way to find out whether they are owed proceeds.