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Affidavit Time Frame

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Question: 
Is there a date of when we should receive an affidavit? I have an altered payee case where the affidavit was signed in November, 2009, and I did not receive the request until February, 2010. Is there a thirty day rule? Also what is the timeframe for an altered payee item to be returned? Is it twenty-four hours or does it fall under a warranty of three years?
Answer: 

In cases in which yours is the paying bank, section 4-406 of the Uniform Commercial Code in your state applies. Under the model statute, your depositor has a responsibility to identify and report an alteration promptly. In cases of multiple alterations by the same wrong-doer, the bank's liability to the depositor may be limited to altered items paid before the end of thirty days from delivery of the first statement that reflects the payment of an altered item.

The bank's deposit agreement may define "promptly" by establishing a time limit for notifying the bank of an alteration. If there is no stated time limit, or if a court determines that the bank's imposed limit is not enforceable, the absolute time limit for making a claim is one year, but it could be shorter in your state.

As for return of a check with an altered payee, the midnight deadline applies. However, a "without entry" or bank-to-bank claim can be made under the Presentment Warranties of section 4-208 within the time limits for such a claim. The warranty claim would not be enforceable if your bank paid a customer's alteration claim after the one-year cutoff, however.

First published on BankersOnline.com 4/05/10

First published on 04/05/2010

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