Guarantees?
If the citizen can't prove that the cop took his property, then he will not be compensated.
If the citizen doesn't have the resources to fight the city in court, he will not be compensated.
If the citizen can't prove that the property was his because flood waters destroyed records, then he will not be compensated.
There are no guarantees.
You say that there is a possibility of abuse and no one will disagree with that. But in real life there is very little abuse and what abuse that does exist is going to exist with or without the law.
Because it doesn't work perfectly, you maintain it should not be, even if works to prevent abuse.