Newsom vetoes bill to stop DMV from keeping money after sales of towed cars

In summary

The bill was inspired by a CalMatters investigation.

Gov. Gavin Newsom this week vetoed a bill that would’ve stopped the Department of Motor Vehicles’ practice of keeping excess proceeds from the sales of towed cars.

The DMV’s handling of the money came under scrutiny following a CalMatters investigation that showed the agency had kept millions of dollars in proceeds without notifying the cars’ owners.

People who can’t afford the fines and fees after their cars get towed sometimes leave their vehicles at the storage yards, which can sell cars to recoup the costs through what’s known as a lien sale. The DMV can keep the money.

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.

The bill by state Sen. Kelly Seyarto, a Republican from Murrieta, would have forced the DMV to turn those funds over to the state Controller’s Office to be treated like unclaimed property. It was passed by the Legislature.

“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 said the bill would force new costs without clearly getting more funds into the hands of car owners. He noted that the DMV has now created a tool to make it easier for car owners to find out if they’re owed money. The agency’s tool mimics one created by CalMatters.

As originally written, Seyarto’s bill would’ve required the department to notify owners within 14 days of receiving the surplus, but that provision was removed as the bill was amended in the legislative process.

Most lien sales don’t cover the towing and storage fees. However, CalMatters found that the DMV collected more than $8 million from nearly 5,300 cars sold at auction between 2016 through the fall of 2024.