Check Handling Guide

Did you know that a check dated prior to six months or more before presentment is considered “stale-dated?” A drawee bank may or may not pay a stale-dated check. Should the drawee bank pay the check “in good faith” they cannot be held liable. The midnight deadline DOES apply. Under the Uniform Commercial Code: 554.4404 A bank is under no obligation to a customer having a checking account to pay a check, other than a certified check, which is presented more than six months after its date, but it may charge its customer’s account for a payment made thereafter in good faith.

Customers often believe that an item more than six months old is not negotiable. If a customer complains about  payment of a stale-dated check, the drawee bank has to make a business decision as to how to handle the item based upon damage to the customer, reputation risk, etc. Important Note! Because a bank has the option of paying or not paying stale-dated checks, if a person presents a stale-dated check drawn on another institution at the teller window for cash, it should notbe accepted as the drawee bank may or may not pay it.

Complete details about check handling can be found in the IBA’s Check Handling Guide (member login required) available from the IBA Compliance Department.

 

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