If you hold a check according to RegCC for five days and the check is returned in three do you release the hold ?

Once I have recovered the funds from the account, the hold is released.

if the check is returned you should not be releasing any funds, as the check is not valid. If you mean the check was paid in 3 days, then by all menas, you should release the hold as you have been made whole

Happy --
If I deposit a $5000 check in my account that you hold for 5 days, and you get the check back on day 3 and charge it back to my account leaving a $1,000 balance, you can safely release the hold. If you don't, my available balance will be driven negative for no reason.