Stale Dated Check Sent for Collection

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Question:

I know that the generally accepted time frame for stale dated checks is six months, but I'm wondering how/if that applies to checks sent for collection. I've received a seven month old check for collection that was previously returned NSF. The payee came to the bank several times to try to cash it over the counter, but funds have never been available. The person finally mailed the item to us for collection. The account will receive a direct deposit in a couple of days, at which time the check will pay. Should I pay the item or should I return it due to the stale date?

Answer:

The fact that the check was presented for collection doesn't change the bank's legal position under the UCC at all. Section 4-404 allows the bank to refuse payment based solely on the date, but it also allows the bank to pay the item in good faith, if it's otherwise properly payable.

Check your records for any stop payment order that is in effect on the check. If there is no such order, you still have the option to go either way. However, also remember that you are under no obligation (unless you agreed to do so) to hold the check waiting for the deposit you mentioned. You can refuse payment now and deny yourself the option later.

First published on BankersOnline.com 9/21/09