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Home >> Checks/Money Orders >> Checks You Received
Confusion from Check for Repairs; Not Money
In December of ’07, we had extensive damage to our home. Our insurance company issued a check for repairs (less deprecation the cost that would be returned when the repairs were completed) made out to us and the mortgage company. The mortgage company held onto the check since January of ’08. A new check was sent later for additional costs by the insurance company, which we promptly endorsed over to the mortgage company in June of ’08.
We got a loan to get the repairs done on our home. The mortgage company will only make the check out to all parties after 95 percent of the work had been done.
After the repairs were finished, my mortgage company issued a check made out to my husband and I, and the contractor that did the repairs on our home. The check was for over 11K; we endorsed the check, and so did the contractor. Since we had already paid the contractor almost all of the money that was owed (we only owed 2K); we deposited the check into our bank account. Our bank returned the check saying that we would have to take the check to the contractor’s bank and have their bank issue us a cashier’s check for the amount we have already paid. The contractor told us that if the check were to be deposited into their account the state would seize the funds. How are we supposed to get that money back from the mortgage company, which the insurance company paid for repairs if the check cannot be cashed?
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 Clearly the contractor owes somebody some money. It doesn't matter who, as long as it isn't anyone who worked on or supplied materials for your home repairs, but you definitely don't want to get dragged into whatever mess he is in.
Your mortgage company wants to ensure that the contractor is paid in full so that he can't file a lien against the property for nonpayment. If the mortgage company currently holds the funds, get a letter from your contractor detailing the amount of the job, and showing credits for the amounts you have already paid. The purpose of the letter, which should be addressed to you with a copy to the mortgage company, is to show that the contractor doesn't have an interest in the whole amount. He only wants whatever has yet to be paid.
Then ask the mortgage company to issue two checks. The first can be payable to you and your husband and the contractor, for any amount yet due to him. The second check should be payable only to you and your husband. The contractor can supply a receipt reflecting "paid in full" that can be given to the bank. You endorse the small check with the contractor as a joint payee and give it to the contractor, and he does whatever he needs to to get his money. Perhaps he can cash it at the bank that it's drawn on, and you get to deposit the other, larger, check, without any fear that it will be refused again. Hopefully, your mortgage company will agree to this plan, because it makes sense, allows you to get your money, and ensures that the contractor will be paid in full, and that, after all, is what the mortgage company was trying to do in the first place.
Published on BankingQuestions.com 10/09/08
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