Expiration of Stop Payments (UCC)

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Question:

My question is concerning Stop Payments. The UCC states stops last for 6 months then expire. However my bank keeps stops on, whether ACH or paper, indefinitely. In other words they never fall off the system unless they are deleted by back office. Is this within the guidelines of the UCC and aren't we denying ourselves income by not having the 6 month expire date? Do you know if there is away to send a notice 10 days before the 6 month expire day to the customer for renewal? Our bank is in Clearwater Florida.

Answer:

John Burnett

First, check to see whether your bank has made some sort of change to the UCC rules by making its stop payments non-expiring by agreement. It's within the bank's ability to do so, but it may be "overkill" in an attempt to protect its customers from payees who swoop in two days after the end of the normal expiration period to take advantage of the fact that most customers don't bother to renew or extend their stop payments.

You could ask your IT folks or service provider whether the system can generate a pre-expiration notice on stop payments (assuming the actual expiration date has been entered on your records).

Answer:

Brian Crow

John's answer addresses stop payments on checks. Note that NACHA rules require that the bank honor ACH stop payment requests on consumer accounts indefinitely without the customer renewing the stop order every six months.