Remind me again.....please.

We have an existing customer, not a new account. Does not have repeated overdrafts. Balance is usually under $500.
He deposited a $20000.00 cashiers check at our drive thru on Friday. We tried to verify the check but the bank it was drawn on does not verify funds. We placed a hold on the full amount of the check for 7 days for 1) being over $5000 and 2) reason to doubt collectability.

Our funds availability policy says that we will make funds from checks available on the same day we receive the deposit. And then of course it goes on to say longer delays may apply if ........over $5525, we believe a check won't be paid...etc. (which we used both reason on his hold notice)

Should we have made the $5525 available to him immediately? or the next day? or was it legal for us to hold the full amount?

ANY advice is greatly appreciated.....

I believe it would be $5,525 the next day, the rest the sixth day.

Also, not having a bank verify a check is not a valid reason to doubt collectability.

Great question, danyielg. Reg CC can be quite confusing as there are many complicated parts to the rules.

As Randy said, they should not have used the "reasonable cause to doubt collectability" reason as not being able to verify funds (when a bank won't provide this information to you) is not a valid reason. In order to use this reason, they would have had to have received some information from the other bank, such as a statement that the check would not be paid. The fact that you were not able to verify funds is not a sufficient reason to hold funds.

That said, they can absolutely use the large deposit exception hold. Unless their funds availability disclosure says they will give the customer availability on the same day as the deposit, Reg CC permits them to provide availability of the first $5,525 on the next day and the remaining balance on the seventh business day.

So, here is what you should have done for your $20,000 check: $5,525 available on the next day and $14,475 available on the seventh day after the day of deposit - using only the large deposit exception hold.

Now, as a clarification, seventh day availability (instead of just six days) is permitted for some next day items (i.e. your cashier's check) for special exception holds, based on the commentary which says:

3. With respect to Treasury checks, U.S. Postal Service money orders, checks drawn on Federal Reserve Banks or Federal Home Loan Banks, state and local government checks, cashier's checks, certified checks, and teller's checks subject to the next-day (or second-day) availability requirement, the depository bank may extend the time funds must be made available for withdrawal under the large deposit, redeposited check, repeated overdraft, or reasonable cause exception by a reasonable period beyond the delay that would have been permitted under the regulation had the checks not been subject to the next-day (or second-day) availability requirement. The additional hold is added to the local or nonlocal schedule that would apply based on the location of the paying bank.

Thank you again rlcarey

Thank you Adam