This is so completely outside my realm, so I thought maybe I could ask for your help. A while back, we deposited a check that was made out to Member A, Member B, Lender A and Lender B (that's us). It was a partial settlement of a dwelling claim for damage. Well, we received endorsements from all parties except Lender A, and we deposited the check anyway. What, if any, liability or penalties are we exposed to now? I appreciate any help!

You are at risk that Lender A can claim no value received. I'm sure the value they expected was that their collateral was made whole again instead of cash. If that actually happened, your risk is minimal as they got what they expected.

You could send them a letter documenting that you confirmed that their collateral was made whole and asking them to confirm that they have no further claim to the proceeds.

Al

And if the collateral was not made whole again? Or, if we could not verify that? What would our liability be?

Was the collateral made whole so your loan could remain in place, or did you use the funds to pay off or down your loan?

Al

UCC Section 3420(b) sets forth the potential liability for accepting a check with a missing endorsement as follows:

"the measure of liability is presumed to be the amount payable on the instrument, but recovery may not exceed the amount of the plaintiff's interest in the instrument."