My brother deposited a check for a car he sold. The bank held the funds for ten days then after the holding period deposited the funds into his account. A month later the bank sends him a letter saying the check was bad. Now they say he owes the money he has now spent. The are threatening to send him to collections. What rights does he have? Doesn't the bank only have a certain time frame to charge the check back to him? Shouldn't they go after the issuing bank?
You have described what might be called a late return. Your brother should ask his bank when it received notice that the deposited check was being returned. His bank had a limited time window once it learned of the return to notify your brother. Similarly, his bank should have challenged the timeliness of the return of the check or the notice of that return, if it had reason to believe the paying bank delayed beyond one business day its notice that it was bouncing the check. If your brother isn't able to convince his bank that it may owe him a refund for the amount of the check, he may need to discuss the problem with a lawyer who is conversant with the requirements of the Uniform Commercial Code in his state.
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You have described what might be called a late return. Your brother should ask his bank when it received notice that the deposited check was being returned. His bank had a limited time window once it learned of the return to notify your brother. Similarly, his bank should have challenged the timeliness of the return of the check or the notice of that return, if it had reason to believe the paying bank delayed beyond one business day its notice that it was bouncing the check. If your brother isn't able to convince his bank that it may owe him a refund for the amount of the check, he may need to discuss the problem with a lawyer who is conversant with the requirements of the 