The bank can choose not to honor it if it’s older than six months. That means if you what are retained earnings find a stale check made out to you, contact your bank and the check-issuing bank and find out their policies. As stated in the article, business owners must address stale checks by notifying their original owners under the escheatment law applicable in all US states. When you pay someone by check, your payee must deposit or cash the check to collect the payment. The payee’s bank will request money from your bank, and the transaction concludes when your bank sends funds to the payee’s bank. If a check is destroyed or never deposited, the money remains in the payer’s account.
A Walkthrough of the Escheatment Process for Outstanding Checks
The six-month rule usually applies to personal and business checks, including payroll ones. Set a time frame to write off stale-dated checks in your accounting policy handbook. Accounting Security The exact time frame is up to you, but one year or two years are both common benchmarks. To write off the check, debit the cash account and credit the original expense account.
Sherry O’Neill, Stephen C. Holton, Attorney at Law, Lexington, NC 27292
A stop payment informs your bank that you do not want the check cashed and essentially voids the check. Typically, banks print the words “void after X days” on cashier’s checks that can go stale. If you’ve found a “forgotten” cashier’s check, look for this disclaimer. After the expiration date, the bank may consider the funds unclaimed property and transfer them to the state in a process called escheating2. However, you can still contact the bank and request a replacement for a stale cashier’s check.
Why Do Stale Dated Checks Happen?
- The account it’s issued against could be closed or may not have enough money in it to cash your check.
- The payee may have received the check, but lost it before they could deposit or cash it.
- You can try and deposit or cash it, but you risk the check being rejected by your bank or possibly returned from the issuing bank.
- If you want to place a stop payment on the original cashier’s check, doing so is at the bank’s discretion.
As mentioned, personal checks are usually valid for up to six months after the date they were issued, but you shouldn’t count on the bank to pay attention to the dates. Legally, banks are only required to honor checks for six months. Beyond that, it is up to the bank’s discretion, which may include contacting the account holder for approval. The bank also can simply bounce the check without even trying to reach out, which means the depositor may get hit with a “deposit item returned” fee that can be up to $30 or more. A check which is six months older than its payment date does not have to be honored by the stale dated checks bank.
How can I find out if an item is available for reissue?
They may also charge fees that eat away at a money order’s value. If you find an expired check, your first action should be to call both your bank and the issuing bank to learn about their policies. To make a case for punitive damages in a situation in which a bank wrongfully honored a stale check might be challenging. Again, only if the bank committed some type of outrageous wrong could a claim for punitive damages succeed.
