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This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.

In a representative scenario, a buyer acquires a Florida company with a long operating history — a wholesaler, say, with thousands of customer accounts going back two decades — and the diligence team works through the obvious risks: the financials, the contracts, the litigation, the tax returns. Everyone signs off. Eighteen months later the buyer gets a letter from a state unclaimed-property auditor, often a contingent-fee firm working on the state’s behalf, announcing an examination of dormant credit balances, uncashed vendor and payroll checks, and abandoned customer deposits going back years. The liability is the prior owner’s bad reporting habit, but the buyer is the one holding the bag, and because the property was never reported, the exposure is not a tidy number on the balance sheet — it is an estimate the auditor builds, with interest and penalties on top. Unclaimed property is one of the quietest successor liabilities in an acquisition, and it almost never makes the standard diligence checklist.

Unclaimed property is a liability, not a curiosity

Most operators think of unclaimed property, if they think of it at all, as a consumer-protection oddity — the state holding forgotten bank accounts for people to reclaim. For a business, it is a compliance obligation with real teeth. Florida administers the Florida Disposition of Unclaimed Property Act in Chapter 717, and the core duty is straightforward: a business that holds property belonging to someone else which has gone dormant for the statutory dormancy period — uncashed checks, unredeemed credits, customer overpayments, unreturned deposits, stale accounts payable — is a “holder” that must report and remit that property to the state. The duty to report is recurring, and sets out the holder’s reporting obligation, including the information the report has to carry. A company that simply writes stale checks and credit balances back into income instead of reporting them to the state has been quietly accruing a liability the whole time.

The reason this matters in M&A is that the obligation does not evaporate when the business changes hands, and the statute expressly contemplates successors. Chapter 717 requires that where a holder is a successor to a prior holder, or has changed its name while holding the property, the report must include the known names and addresses of each prior holder. In other words, the reporting regime is built to follow property across ownership changes — the acquirer inherits the duty to report what the target should have reported, and the historical exposure rides into the deal with it.

Why the structure of the deal does not save you

Buyers sometimes assume an asset deal walls off this kind of historical liability, and unclaimed property is a place where that assumption is shaky. The analysis rhymes with ordinary Florida successor-liability exposure in an asset deal: even where a buyer takes assets rather than equity, the way the unclaimed-property obligation attaches to the holder and follows the property means a buyer that continues the business and steps into its accounts can find the duty — and the auditor’s attention — landing on it anyway. And unclaimed property is not only a Florida problem. The obligation runs to the state of the owner’s last known address under longstanding priority rules, so a Florida target with out-of-state customers can carry exposure to many states at once, each with its own dormancy periods and its own appetite for audits. A buyer that diligenced only Florida has seen part of the picture.

An equity deal makes the inheritance even more direct, because the entity that owed the obligation is the same entity the buyer now owns. There is no plausible argument that the liability stayed behind — it is sitting inside the company the buyer just bought, in the form of years of unreported credit balances and stale checks the buyer now has to deal with.

What the exposure actually looks like when it surfaces

The thing that makes unreported unclaimed property dangerous in diligence is how the number gets built when there are no records. When a holder has not reported and cannot produce clean records for the audit period, the state and its examiners are authorized to estimate the liability — Chapter 717 includes the audit, examination, and estimation machinery, and an estimated assessment over a long lookback, grossed up with interest and penalties, can dwarf what an accurate contemporaneous report would have cost. That dynamic rewards the diligence team that asks the question early and punishes the one that does not, because the cost of cleaning this up is far lower before it becomes an estimated assessment.

So the move is to put unclaimed property on the diligence list as its own line, the way a disciplined Florida M&A diligence checklist treats taxes and liens. Three questions do most of the work. First, has the target ever filed unclaimed-property reports, and if so, for which states and how consistently — a target that has never filed despite years of operations is a flag, not a clean bill. Second, what is sitting in the aging detail: the stale accounts payable, the unredeemed customer credits, the uncashed payroll and vendor checks, the dormant deposits that are the raw material of an assessment. Third, how should the deal allocate the risk — a specific representation about unclaimed-property compliance, an indemnity that survives long enough to cover an audit lookback, a holdback or escrow sized to the estimated exposure, or, where the problem is large and quantifiable, a pre-closing voluntary disclosure that caps it. Naming the risk is what lets the parties price and allocate it instead of discovering it after the auditor does.

The takeaway

Unreported unclaimed property is a successor liability hiding in plain sight, and an acquisition is exactly where it surfaces. Florida’s Chapter 717 makes a business that holds dormant credits, stale checks, and abandoned deposits a “holder” with a recurring duty to report under ; the regime is built to follow property across ownership changes; deal structure offers less protection than buyers assume; and where records are thin the state can estimate the exposure and add interest and penalties on a long lookback. Treat unclaimed property as its own diligence line — confirm the target’s filing history, dig into the aging detail, account for out-of-state exposure, and allocate the risk through reps, indemnity, escrow, or a voluntary disclosure. Do that and a quiet liability becomes a priced and managed one; ignore it and the buyer learns the number for the first time from an auditor, after the deal is long closed.

Our Fernandina Beach office works with buyers and sellers of Florida businesses on unclaimed-property diligence, the reps and indemnity that allocate historical compliance risk, and the broader diligence a Florida M&A transaction requires.

If you are buying or selling a Florida business and want unclaimed-property exposure checked before you close, feel free to reach out to my firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.