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Signed Affidavit of Alteration-Send Back w/o Entry

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Question: 
A check deposited at our bank on Nov 2, 2012 was returned to us for a cash letter dated Jan 25th for unauthorized signer (stolen). We returned it for lateness but have received it back from the Payor bank with a signed affidavit of Alteration. It is not altered, it is a stolen check. We want to send it back to bank without entry. Can we?
Answer: 

If the original return alleged that the drawer's signature was forged or otherwise unauthorized, it was late. If the check was instead signed by an authorized signer and subsequently stolen and the payee information was altered, the first return was a clumsy error by the paying bank, and it still has the right to claim that the check was altered, making the second trip back to your bank a legitimate one, but the claim should have been made against your presentment and transfer warranties, since the wrong payee got the proceeds. If this scenario sounds correct to you, contact your bank counsel (assuming the dollars warrant his or her turning on the meter) for advice on how to proceed.

If, on the other hand, it was actually the drawer's signature that was forged, you don't have to honor the alteration claim. You can and should tie it up with a nice denial letter in which you say that if the drawer's signature was forged, the check was never valid in the first place, and the alteration is moot.

First published on BankersOnline.com 7/15/13

First published on 07/15/2013

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