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Late Return or Not?
by John Burnett, BOL Guru
Guru Bio
Question: We purchased a bank over a year ago and we now have a bank coming back to us stating that they had a claim of late return through FED that was originated by our purchased bank a year and half ago. They never responded to the claim by the deadline so therefore they were stuck holding the debt. They are now coming back to us stating that they were not late and gave us the proof they were not late. However, they did not send a large item notification of the return. How much time does the first bank have to come back to us and to try and collect on this claim? Do we get stuck with the loss if the account was negative on the date we would have received the notice if one had been sent?
Answer: The Fed's Retail Check Adjustments Guide indicates that the paying bank had 20 banking days (roughly one month) to file a DR (disclaiming of late return) with the Fed or one year to file it directly with the depositary bank on a no-entry basis. Other than that, I see a three-year drop-dead term on filing claims under most sections of Article 4 of the UCC. I think you should stick to your guns on this unless it can be demonstrated that the paying bank responded earlier to the (now merged) depositary bank.
First published on BankersOnline.com 1/14/08
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