A cashier’s check is distributed by a bank and includes a guaranteed amount to the receiver. By signing off on it, the cashier confirms sufficient funds exist in the account to cover it. In other words, the banks are promising the money is there rather than the individual remitting the check. Credit unions will also issue these checks in the same fashion. This type of payment comes in handy for large purchases, but what happens if you lose or suspect that it has been stolen? Can payment be stopped on a cashier’s check?
Can Payment Be Stopped on a Cashier’s Check?
When you buy a cashier’s check from your bank or local credit union, they use the money from their account, thus mostly removing any concern to the payee that the check may bounce. This essentially makes the check usable as cash. You may need to use one when buying a home, where they would not accept debit or credit as a form of payment for such a large purchase. Unlike a regular check, a cashier’s check will not bounce. (Hence, the guarantee.) This does not mean, though, that it is incapable of becoming lost or stolen. So what do you do in a situation like this?
Many say you can’t stop payment on a cashier’s check. However, you do have options. According to the National Check Fraud Center, if your cashier’s check was destroyed, lost, or stolen, you can make a claim if the check was issued in a state that adopted the Section 3-312 of the UCC. This article notes the procedure for making what is known as a “declaration of loss,” which is made under penalty of perjury, to your bank that issued the check. By filing this, you claim the check is gone and cannot be redeemed.
The National Check Fraud Center explains that once your claim is submitted, you will have to wait 90 days after the check was issued or accepted, or the date the claim was made for it to become effective, whichever is later. During that time, the bank has no obligation to reissue or repay you for the check until they can determine whether or not your claim is valid. If it were stolen and the thief tries to cash it, the check will not be honored.
If you do need the money sooner than the 90-day period, you can contact your bank and see what can be done. But, they may still decide to wait on it. They may also make you sign an indemnification agreement to protect themselves. If your claim is valid, you should not have anything to worry about. Make sure to just always maintain communication with your bank in the case that it would show up.
When the claim does become effective, the National Check Fraud Center states that the bank “may pay the claimant the amount of the check or reissue a check to the claimant.” Following your approved claim, it may take 30 to 90 days to get a replacement check. While not ideal, this is still better than losing the money.
Although it is possible to create a claim and get your money back for your lost or stolen cashier’s check, this may not apply if you simply changed your mind. Many banks will not permit you to stop payment on a cashier’s check that you decide you no longer want, or they will make it as difficult as possible for you to do so. On the other hand, you cannot stop a valid payee (the individual you have given the cashier’s check to) from depositing the money.
It’s always wise to check with your bank to see what their requirements are prior to completing the transaction.
Have you ever had to stop payment on a cashier’s check before? What was your experience?
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