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Home >> Checks/Money Orders >> Checks You Received
Holding a Check for Four Months?
My husband and I received an insurance check as settlement for hail damage on our car. It was made out to my husband and the bank where our car loan is, which I was unaware of, and I deposited it into my checking account at a different bank. I recieved a notice in the mail that the bank was holding the funds. I called my bank and was told I would need to have the other bank sign a release for them to release the funds. The bank will not sign a release; they want the original check, but it was cashed and cleared and has been on hold now for four months. Can my bank legally hold the funds for this long? I feel they should have sent the check back to me asking for the endorsement instead of holding it this long.
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 Under ordinary circumstances, that hold placed by your bank should have aged away within a few days. It appears, though, that the bank has placed an extraordinary hold on the belief that the check will, in fact, be returned to them. It's also apparent the bank didn't examine the check for endorsements until after the check had been sent on its way to the bank it was drawn on. They undoubtedly looked at an image of the check, not the real thing.
To get the funds out of limbo may take action on the insurance company's part to file a claim for the endorsement problem. That should get the paying bank to act and your bank would then take the provisional credit away, eliminating both the deposit credit and the hold, from you. Then the insurance company can issue another check. When they do so, be sure you don't deposit it unless the bank that holds the lien on the car signs off and releases the check back to your husband. Then deposit it to his account, not yours.
It is critical that the payees on checks pay attention to exactly how checks are drawn before depositing them. When other parties, such as the lending bank in this case, have an interest in the check, failing to get their endorsement first can have lasting negative effects.
Published on BankingQuestions.com 1/09/09
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