Bill would stop California DMV from making millions off auctioned cars without telling the owners

State lawmakers have pushed forward legislation that would change a decades-old state law allowing the Department of Motor Vehicles to receive millions of dollars from auctioned cars without telling the owners.

The bill from Murrieta Republican Senator Kelly Seyarto directly follows CalMatters’ reporting, which revealed that the DMV collected more than $8 million from nearly 5,300 cars sold at auction from 2016 to late 2024, without having to notify the owners that their towed cars had been sold for a surplus.

“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,” according to a bill analysis written for the Senate Transportation Committee.

State law does not require the agency to tell people that they could claim their money, and after three years, owners lose their right to the money.

Storage yards, towing companies and car repair shops can auction vehicles when the owners don’t pay and pick up their vehicles. The auctions are known as lien sales.

The legislation would require the department to notify owners within 14 days of receiving the surplus, detailing the amount and how the owner can claim their money. It would also require the notice to be sent through certified mail with a return receipt.

In the bill analysis, Seyarto said it closes a “serious consumer-protection gap in California’s lien sale process by ensuring that vehicle owners are actually notified when the state is holding surplus auction proceeds that belong to them.”

The bill has no registered support or opposition, according to the bill analysis.

Tows and compounding fees can be a debt trap. Police can tow your car for things like expired registration, but you might not be able to get it back if you can’t renew your registration because you have unpaid fees and fines from things like traffic and parking tickets. People who can’t afford the fines and fees often leave their vehicles at the storage yards, who can sell the car to recoup the costs through a lien sale.

Before CalMatters’ report, there was no easy way for people to know that they had money and no easy way to claim it. However, after our initial story, the department copied a CalMatters tool to help people claim their money. It’s now available on the DMV’s website. The website also includes an FAQ on how to claim your money.

A hearing for the bill is scheduled for Monday in the Senate Appropriations Committee.

___

This story was originally published by CalMatters and distributed through a partnership with The Associated Press.