Answer:
You aren't under any obligation to accept that or any other check for deposit. Pulling it out of the deposit as soon as you learned that funds weren't available to cover it at the drawee bank was an acceptable move, and your notice would probably be considered timely. Considering the dollars involved, it might be wise to attempt calling the customer to inform him of your actions. That would prevent any misunderstandings or incorrect expectations. It also lets your customer know your bank is on top of things. If your customer argues that he's made arrangements to cover the check at the bank where it's drawn, you can tell him to deposit the check when the drawee bank is able to confirm that funds are there to cover it.
First published on BankersOnline.com 10/15/07
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