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#215696 - 07/26/04 07:40 PM Stale Dated Check
Just Jean Offline
Platinum Poster
Joined: Feb 2002
Posts: 582
USA
We have a customer who doesn't want to put a stop payment on a check. She just plans to watch her account because a stop payment is only valid for six months. She contends that since the item is stale dated by then that we can return it and/or reimburse her.

I know I've seen previous posts about stale dated items but I couldn't find them. I realize we have two problems here - one with her "watching the account" for six months.

My question is, what happens if a stale dated item is presented. We obviously don't check dates in the current posting environment. What rights/responsibilities do we have regarding stale dated items?

Thanks.

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General Discussion
#215697 - 07/26/04 09:37 PM Re: Stale Dated Check
Paragon Offline
Diamond Poster
Paragon
Joined: Dec 2003
Posts: 2,164
Per Guru John Burnett on another thread:

Stale dated checks are a problem. Because banks cannot examine every check for date, the Uniform Commercial Code allows a bank to pay checks over 6 months old, if it does so in good faith. That means it can't know that you don't want the check paid after that date. The bank also can dishonor a check over 6 months old without fearing a suit from its depositor for wrongful dishonor.

Best advice I can give is to decide whether it's worth the expense to put stop payments on the checks. If so, it might also be worth a renewal six months from now. At some point, the risk of the checks' being presented for payment shrinks so you can just write the checks off as dead issues. That doesn't get you off the hook with the people you gave the checks to, though.
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Seems like a stop and renewal is the answer.

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#215698 - 07/27/04 01:44 PM Re: Stale Dated Check
Pup Offline
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Pup
Joined: Sep 2003
Posts: 5,045
Pedaling along a scenic highwa...
Stale-date issue aside, I have issue with the customer watching the account for this check to post. So, what if it posts before it becomes "stale-dated"? If it posts with no stop payment placed, it can't be returned as such. It would have to be honored, right? Example: A check posts on yesterday's business and the customer first has access to this today, after we've updated all of yesterday's business. With no stop payment in place yesterday, the check must be honored or returned for another reason. Am I way off?

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#215699 - 07/27/04 04:58 PM Re: Stale Dated Check
Just Jean Offline
Platinum Poster
Joined: Feb 2002
Posts: 582
USA
No, I see it that way too. I was just wondering about a stale dated check. If the customer wants reimbursement on a stale dated item, stop pay or no, do we have to honor it. Whose loss would it be?

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#215700 - 07/27/04 05:05 PM Re: Stale Dated Check
Tisa Offline
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Tisa
Joined: Jun 2003
Posts: 938
Do you know the way to ...
Check your account agreement.

Ours has clauses for Stale-Dated: We are under no obligation to pay a check on which the date is more than six months old. If we do pay it, we will not be liable to you for any costs or damages.

And for Post-Dated: We will not be liable for paying post-dated checks unless you have provided a timely and valid stop-payment request and paid the applicable fee. (it then goes into all the standard stop-pay clauses.)

If you have similar clauses, and I'm guessing most banks do, you have written your own protection into your contract with your customer.
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Just a lowly 1st Year Law Student ("1L"), so don't take anything I say seriously!

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#215701 - 07/28/04 03:30 PM Re: Stale Dated Check
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
But if there's nothing about stale or post-dated checks in your account agreement, look to the version of the UCC in your state. In almost every state, the bank is allowed to pay a stale check without risk, if it does so in good faith.

Once again, good faith suggests that the customer hasn't a "side" agreement with the bank that says the bank agrees to check dates on all our checks and bounce anything older than X." Most bankers possessed of good sense would never sign such an agreement.

The bank also wins if it bounces a stale check for date. The customer cannot sue for wrongful dishonor. Again, this assumes there's not a side agreement saying "bank agrees to pay even stale checks notwithstanding their dates."
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

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#215702 - 08/27/05 01:53 PM Re: Stale Dated Check
Anonymous
Unregistered

If a check is 13 months old does the bank still have the right to cash the check when the loan is paid off?

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#215703 - 08/27/05 04:47 PM Re: Stale Dated Check
RBanker Offline
Power Poster
RBanker
Joined: Jul 2003
Posts: 2,675
Austin Texas
See John's post above which answers your question - now, if the dollars are applied to your paid off loan that will give you a credit balance which the bank will refund to you.
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