Here is how it works, and how it has always worked in California.
Your car gets towed. The reason does not matter for this story... expired registration, unpaid parking tickets, a lapsed insurance notice, any of the dozens of small administrative failures that can spiral into a debt trap when fees compound faster than people can catch up. The fees rack up in the tow lot. They reach a level you cannot pay. The storage yard or towing company sells your car at auction to recover what you owe them.
That sale is called a lien sale. It is legal, it is established, and it is sometimes unavoidable.
What is less well known is what happens when the auction produces more money than the debt requires. If your car was worth $4,000 and the debt was $800, the lien sale collects $4,000, the towing company takes its $800, and the surplus... $3,200 in this example... goes to the California DMV.
And until very recently, the DMV was not required to tell you that.
The numbers
CalMatters published the investigation that broke this open. Between 2016 and late 2024, California's DMV collected more than $8 million in surplus auction proceeds from nearly 5,300 vehicles. That averages out at roughly $1,500 per vehicle above what the owner actually owed.
State law does not require the agency to notify owners that the money exists. It does not require a letter, a phone call, an email or any contact whatsoever. Owners who do not know to make a claim simply do not claim. And after three years, the right to the money expires entirely. It is gone. The state keeps it.
The system was not designed to be malicious. It was designed to be convenient... for the state. Notifying people costs money and effort. Not notifying them costs nothing. For decades, the incentive structure pointed entirely away from transparency.
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Who this happens to
The people most likely to lose a car to a lien sale are not people with the resources to monitor the DMV's unclaimed funds database. They are people living close to the margin, for whom tow fees compound faster than they can be addressed, for whom an unexpected $400 charge can cascade into a $2,000 impoundment before they have the cash to respond.
As Carscoops notes, a person living paycheck to paycheck can have their whole situation overturned by a single tow. The car that gets them to work disappears. The fees accumulate. Eventually the car is auctioned. And if it sells for more than the debt... which it very often does, because cars are worth more than storage fees... the person who lost their transport and their financial stability was also, in effect, leaving money on the table they did not know existed.
That is who the current system fails. Not people with lawyers and accountants who know to check the DMV's unclaimed property portal. The people who have already lost the car and moved on.
The bill
SB 1029, introduced by Republican Senator Kelly Seyarto of Murrieta, would require the DMV to notify owners within 14 days of receiving surplus lien sale proceeds. The notice must be sent by certified mail with a return receipt. It must detail the amount available and explain exactly how to file a claim.
The fix is so straightforward that it is almost embarrassing it does not already exist.
In his bill analysis submitted to the Senate Transportation Committee, Seyarto described it as closing a gap in the process: "The article raised concerns that the process to recoup excess funds after a lien sale is opaque, and many people do not know whether the sale even resulted in excess money."
The bill has no registered opposition. Nobody has stood up to argue that the DMV should be allowed to keep surplus auction proceeds without telling people they exist. The Senate Transportation Committee has the bill in front of it.
What should happen next
SB 1029 should pass without difficulty, because there is no coherent argument against it. The DMV sold someone's property, collected money that belongs to that person, and chose not to tell them. Requiring a letter within 14 days is the minimum a functioning system owes its residents.
The broader question the bill does not address is what happens to the $8 million already collected under the old rules. The owners of those 5,300 vehicles... most of whom never knew their cars sold at a surplus, and many of whom had the three year window quietly expire around them... are not covered by the new legislation. That money is gone.
A system that works this way for this long does not do so by accident. It does so because nobody in authority looked closely enough, or cared enough to look. It took a CalMatters investigation to produce a bill. It should have taken a sense of basic obligation.
We cover enforcement and accountability stories like this at GaukMotorBuzz.com/drivers-revenge.
Sources:
- CalMatters — New bill would stop DMV from making millions off auctioned cars without telling the owners
- Carscoops — California's DMV Auctioned 5,300 Cars To Cover Debts, Then Kept The Change
- Washington Post — Bill would stop California DMV from making millions off auctioned cars without telling the owners