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Bank Refuses to Replace Cashier's Check

My brother recently sold his home for below market value. He was paid with three $15,000 cashier's checks. He lost one of the checks, he has no job, he has no home, he has no assets. He is trying to get on disability because of a mental condition. The bank will not replace the check. He cannot get bonded because he has no assets. I personally feel that the title company took advantage of him and HAD to notice that he was mentally impaired. Who allows this capacity of a person to sell his home? Anyway, is there any way he can get the check replaced? He needs money to live on. All he cares about in the world is to make sure he has money to pay on his life insurance that he wants to leave his son. Do you have any suggestions?


Almost every state has, in its version of the Uniform Commercial Code (UCC), a section that addresses claims on lost, stolen or destroyed cashier's checks (it also applies to other bank official checks, and to certified checks). In most states, it's found in section 3-312. In New York, it's in section 4-403. South Carolina has not yet updated its UCC to include the provision.

That's a provision that has been added to the UCC since 1990, and it's a real plus for people who buy, send or receive official bank checks. That's because before section 3-312 was added, there was no legal framework for banks to re-issue official checks that could not be recovered. Because banks couldn't "stop payment" or refuse to pay their official checks, they were reluctant to replace them. That meant that customers who had purchased official bank checks or received them in payment were often left with no way to recover funds when the checks were lost, stolen or destroyed. When a bank was willing to replace a check, it did so only after receiving some form of indemnity from its customer. In some cases, that indemnity had to take the form of an indemnity bond, which was very expensive and often not available at any price.

Here's how the Section 3-312 provisions work in this case: As the payee on a cashier's check, your brother can make a claim on the issuing bank and provide a statement that the check was lost. He should ask the bank if it requires specific forms for this purpose. The claim will become enforceable against the bank 90 days after the issue date of the check that was lost. Once the claim is "mature," the issuing bank can honor the claim and will not have to pay the original check. The bank should not require that your brother provide a bond.

If the check was issued only recently, your brother will have to wait a while for his money, but he should receive it once the check is 90 days old.

Published on 4/13/07