(1) Security deposited in compliance with the requirements of section 42-7-301 shall be placed by the director in the custody of the state treasurer and shall be applied only to the payment of a judgment rendered against the person on whose behalf the deposit was made, for damages arising out of the accident in question in an action at law begun not later than one year after the date of such accident. Such deposit or any balance thereof shall be returned to the depositor or the depositor's personal representative, or the person designated by either of them, when evidence satisfactory to the director has been filed with the director that there has been a release from liability, or a final adjudication of nonliability, or a warrant for confession of judgment, or a duly acknowledged agreement, or whenever, after the expiration of one year from the date of the accident, or within one year after the date of deposit of any security, the director shall be given reasonable evidence that there is no such action pending and no judgment rendered in such action left unpaid.

(2) The director may reduce the amount of security ordered in any case within six months after the date of the accident if, in the director's judgment, the amount originally ordered is excessive. In case the security originally ordered has been deposited, the excess deposit over the reduced amount ordered shall be returned immediately to the depositor or the depositor's personal representative, regardless of any other provisions of this article.

(3)

(a) It is the duty of any person having a claim against the security deposited under the provisions of section 42-7-301, on or before the expiration of one year from the date of the accident, to notify the director in writing under oath that there has been a release of liability, or a final adjudication of nonliability, or a warrant for confession of judgment, or a duly acknowledged agreement or that there is no action pending and no judgment rendered in any such action left unpaid or of any action taken on said claim which has not been finally determined.

(b) If any claimant fails to notify the director in writing under oath as provided in paragraph (a) of this subsection (3), the director shall notify the state treasurer to that effect and the state treasurer may, upon receipt of said notification, void the obligation provided for in section 42-7-301 and release and return the security to the depositor. The state treasurer shall then be fully and completely released from any further obligation or liability in relation thereto.

(c) Where said depositor cannot be located, the state treasurer shall notify the depositor by registered or certified mail, return receipt requested, addressed to the last-known address of said depositor, advising said depositor that the depositor must either appear and claim the security deposited within thirty days from the date of receipt of said letter, or said security will escheat to the general fund of the state of Colorado. If said depositor does not appear within the thirty-day period, the state treasurer shall void the obligation as provided in section 42-7-301, and the security shall escheat to the general fund of the state of Colorado, relieving the state treasurer of any further obligation or liability in relation thereto.