A customer called this morning asking when the funds would be available if they deposit a cashier's check. My tellers told them that generally those funds would be available the next business day. Later, someone called (I'm assuming it is the same person) and asked when the funds would be available if the check is payable to a third party, endorsed by them, and deposited into our customer's account.

Assuming the check is $30,000 and not local, am I correct that:

$25,000 would be available on the 11th business day as a large item exception hold, and

$5,000 would be available on the 5th business day as a case-by-case hold because a third-party check is an exception to the next-day availability rule.

I haven't seen this particular scenario before, so thought I'd ask for some help! Thanks in advance!

Don't forget you would still have a $100 next-day availability requirement.

So you have:
$100 next day
$4,900 on 5th business day (under case-by-case)
$25,000 on 11th business day under large item exception

Of course if any other exception hold reason applies, you could hold the entire $30,000 under that exception hold to the 11th business day.

Now, having said all that, make sure you explain to your customer that making the funds available doesn't mean that the bank is saying the check they deposited is good and won't come back. You might want to explain to the customer about the various scams out there involving cashiers checks, especially in light of their curiousity about availability. That could be a warning flag that they may be falling victim to one of those scams. If you have significant doubts yourself, you may want to consider not accepting the cashiers check for deposit, but offer to send it for collection instead. You'll have to weigh the balance of your customer relationship with this customer in making that call.

You'll also want to ask your customer whether he or she knows the payee of the check well. If the check was stolen and the endorsement is forged, the check could come back three years later, and your customer would be liable on his or her endorsement warranty. Even if the check is sent for collection.

Thanks so much for your replies! After I sent my question, I thought about the $100 availability, so I'm glad you brought that up. So far I haven't heard anything else, but I'm ready just in case.

I'm beginning to think it's a big conspiracy to make me learn things! ;-)

Keep in mind, if you can't verify the endorsement from the other party, you could place a "reasonable cause" hold and hold the entire check for 11 days.

Of course, like John said, that's really not going to do anything for you if the endorsement is forged.