Ohio’s new permanent escheat law, enacted to fund major sports facility projects, has resulted in constitutional challenges and a preliminary injunction blocking the planned transfer of unclaimed property funds. Our Unclaimed Property Team discusses the legislation, the court rulings, and what the litigation may signal for other states considering similar funding mechanisms.
- Ohio’s law shifts from a custodial unclaimed property model to permanent state ownership
- Courts have reached differing conclusions on whether the law may be implemented now
- The litigation underscores constitutional risk for similar funding approaches
All 50 states, the District of Columbia, and U.S. territories have adopted unclaimed property laws that require holders to report and remit unclaimed property to the state after the applicable dormancy period has elapsed. Historically, states have held property in custody for the owner and have not taken legal ownership. In 2025, however, Ohio enacted legislation that purports to vest legal ownership of unclaimed property in the state after a defined period, expressly to finance new stadium projects, including a proposed new NFL stadium for the Cleveland Browns for its intended escape to the Cleveland suburbs. That effort has encountered significant resistance, including a recent preliminary injunction issued by an Ohio state court.
The Legislation
Ohio enacted HB 96 during the 2025 legislative session. Among other things, the law adds a new provision to Ohio’s unclaimed property law providing for the permanent escheat of unclaimed property to the state after it has been in the state’s custody for 10 years without a valid claim.
Property reported on or before January 1, 2016 will permanently escheat to the state on January 1, 2026, and property reported after January 1, 2016 will permanently escheat on the tenth anniversary of the reporting date. Owners may file claims for permanently escheated property at any time on or before January 1, 2036. Any claim filed after January 1, 2036 is void, and owners will no longer be entitled to recover the property.
The permanent escheat provision in HB 96 is an outlier among state unclaimed property laws for two reasons. First, permanent escheat is relatively uncommon among the states, although a few states have adopted laws. For example, Hawaii provides for permanent escheat of unclaimed property totaling less than $100 after the state has held custody for more than 10 years. Second, Ohio has expressly earmarked a significant portion of permanently escheated funds for specific public projects. Under Ohio’s 2025 budget bill (HB 434), $600 million in permanently escheated funds expected in 2026 will be used to support construction of a “transformational major sports facility mixed-use project” in Brook Park (largely for building the Cleveland Browns a new stadium). An additional $400 million is earmarked to support construction or renovation of other Ohio sports facilities.
In short, Ohio’s permanent escheat regime is a windfall for Cleveland Browns fans (and the team’s owners) yearning for a new stadium but is seemingly a troubling development for owners of unclaimed property that has been placed in Ohio’s custody.
Takings Clause Challenges
Given the novelty of Ohio’s permanent escheat provisions and the use of funds to construct the Cleveland Browns stadium, this legislative change has already been challenged on federal and state constitutional Takings Clause grounds. The Takings Clause of the Fifth Amendment to the U.S. Constitution provides that private property shall not “be taken for public use, without just compensation,” and the Ohio Constitution has a similar takings clause.
Federal district court litigation
In the Southern District of Ohio, four plaintiffs with property held in Ohio’s Unclaimed Funds Trust Fund (UFTF) challenged the permanent escheat provisions, seeking to prohibit the state from transferring UFTF funds beginning January 1, 2026. The plaintiffs in Bleick v. Maxfield argue that such a transfer would constitute an unlawful taking and cause them irreparable harm.
It appears that there is a strong Takings Clause case to be made against the new Ohio law; Ohio will be taking property from private citizens for public use and will no longer hold property in a custodial capacity. That said, the specific lawsuit itself could rest on shakier ground given that an owner of property that has escheated to the state may claim their property until January 1, 2036 before it permanently escheats to Ohio. As currently drafted, Ohio Rev. Code Section 169.08(I) provides owners with a method to obtain just compensation for property that has been escheated to the state.
The federal court issued its first major decision in the case on December 9, 2025, denying both the state’s motion to dismiss and the plaintiffs’ motion for preliminary injunction and temporary restraining order. The state argued that the case should be dismissed because the federal court should abstain from exercising jurisdiction over the case given that the lawsuit involved state administrative processes that are more appropriately handled by Ohio state courts. The court rejected those arguments, finding that various abstention doctrines did not apply and that the plaintiffs’ Takings Clause claims were ripe. The court also found that the plaintiffs were not required to exhaust state remedies before bringing a federal takings claim.
However, the court denied the plaintiffs’ motion for injunctive relief, holding that although the plaintiffs may succeed on the merits, injunctive relief was not available because Ohio law provides an avenue for plaintiffs to recover their funds until January 1, 2036. The court concluded that there was no irreparable harm caused to the plaintiffs given the availability of monetary relief. The case remains open, and the constitutional issues may not be fully resolved until after the January 1, 2036 deadline has passed.
State court litigation
A separate group of plaintiffs filed suit against the state of Ohio in Franklin County state court seeking declaratory and injunctive relief against the enforcement of HB 96’s permanent escheat provisions under the U.S. and Ohio Constitutions. In Reid v. Maxfield, the plaintiffs allege that the state is currently holding property to which they are entitled in the UFTF.
On December 23, 2025, following an emergency motion filed in light of the impending January 1, 2026 transfer date, Franklin County Judge Bill Sperlazza granted the plaintiffs’ motion, finding that the plaintiffs were likely to succeed on the merits and could suffer irreparable harm if the January 1 transfer were allowed to occur. Judge Sperlazza’s order temporarily enjoining enforcement of removing funds from the UFTF under HB 96 remains in effect until January 8, 2026 at 5:00 p.m.
Looking Ahead
State legislatures outside Ohio are likely monitoring the litigation closely. Permanent escheat regimes may be viewed as attractive ways to fund public projects such as new sports stadiums without raising taxes or risking losing team owners fleeing to greener pastures. To the extent Ohio succeeds in defending the constitutionality of its permanent escheat law, other states may consider similar legislation.
Although the temporary restraining order granted by the Ohio state court represents a significant setback to the state’s proposed funding mechanism, it is too early to determine how this will ultimately play out.
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