I am curious what is the right way to handle this situation.

I wrote a check to somebody, call him Bob. Bob lost the check before he cashed it. I will give him another one (I trust him not to cash the first check if he finds it), but I wonder what should be done about the lost check. Somebody else might find it and forge an endorsement, alter it, etc.

Now I understand that I am not liable if the check is cashed by someone other than Bob. I wonder if I should inform the bank, so that they can bounce that check immediately if it comes in, which would be more convenient for everyone. But I don't know of any way to do this other than to place a stop payment. The bank would charge me to do that and I don't think I should have to pay to avoid liability for something I shouldn't be liable for anyway.

Also, if I just call the bank and tell them about the lost check, will they insist I place a stop payment or risk liability for the check?

Is the situation any different if I lose a blank check?

Thanks in advance.

A stop payment is your best alternative here, and your bank will likely insist on going this route as opposed to just watching out for a lost check.

I don't know the amount of the check in question, but in most cases, it is well worth the stop payment fee to ensure that the wrong check does not get paid. Another option is to ask Bob to cover the cost of the stop payment. He's under no legal obligation to do so, but if he lost the check and is willing to be fair, then he may agree to this.

Adding to Jac's post:

The bank would also charge you for "bouncing" the check. I would rather pay a stop payment fee for peace of mind than an overdraft fee or non-sufficient funds fee anyday.

Were the check blank, the situation would be no different. You should immediately place a stop payment on the check. Just by giving them the check number they can stop it.

Thanks for the suggestions folks. That all makes sense for large checks. For a small check, whose value is not much more than the stop payment fee and wouldn't cause an overdraft, I would probably just hope for the best and risk arguing with the bank or eating the check if there is a problem.

One annoying thing about using a stop payment, though, is that it expires after six months, and then you have to renew it (and probably pay another fee). To be safe, I'd have to keep doing this forever; what if the check shows up in 5 years? (Of course my bank reserves the right to pay old checks.) Either that or close the account and open a new one (which ironically has no fee attached, even though it's undoubtedly way more work for the bank). Any ways around this?

Is there a good reason why stop payments expire, anyway? It's not like after 6 months, I'm going to change my mind and want the check paid. Maybe before computers, it would have been inconvenient to keep checking all those ancient stop-payment orders, but nowadays I can't imagine there is any technical obstacle to having a stop payment last forever.

Thanks again.

Stop payments expire, I would imagine, to prevent mountains of electronic clutter. The utility of a stop order wanes rapidly, but I agree that renewing the stop each 6 months is one way to minimize the likelihood it will later post.

When banks looked at every check (it's in my memory) there was a good chance that checks over 6 months old would be detected and -- under the pre-1990 version of the UCC -- returned for stale date. That fact argued for the 6-month term of a stop order.

But such is not the case any longer. As you've pointed out, even old checks can get paid.

And believe it or not, there is a cost to maintaining old, tired stop payment orders on a computer system. Most third party processors assess a few pennies a month for each and every stop record on the system. And searching the stop file for each attempted check cashing can take longer as stop orders become more plentiful.