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Bank Won't Cash Check, will only Take for Deposit
I operate as a DBA, using my SSN. I have a check from the county goverment for a substantial amount, and took this to the local branch that the check was drawn on, with three forms of ID, and a certified copy of my DBA. I notified the branch of the amount I wished to withdraw a few days before.
They refused to cash the check, claiming I have to deposit it, and that funds would be available in fourteen days. I wish to cash the demand instrument, as I will be required to sign off that I have received the funds. If the check is deposited, I, in essence, have not received the funds, and would be foolish to sign off.
This bank is under the direction of the NYS Banking Department. What laws apply?
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 The bank is certainly within the law in refusing to cash the check. However, the duration of the hold that the bank described is problematic. If you deposit a check issued by a county government in a bank within the state in which the county is located, the Expedited Funds Availability Act and Federal Reserve Regulation CC ordinarily require the bank to make the funds available to you on the first business day following the day of deposit.
The bank may invoke an exception, however. It can place a large-deposit hold on the deposit, making $5,000 available on the first business day and the rest of the check amount available by the seventh business day (a week and two days), or if it has a reasonable concern about the collectibility of the check, it could hold the entire amount until the seventh business day.
A fourteen day hold is both unreasonable and illegal. New York may have even more strict availability requirements.
Published on BankingQuestions.com 3/11/10
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