Can a Cashier’s Check Be Cancelled If Lost?
Lost your cashier's check? Navigate the secure but intricate process of reporting its loss, fulfilling bank requirements, and obtaining a replacement.
A cashier’s check represents a secure method of payment, distinct from a personal check because its funds are guaranteed by the issuing bank, not an individual’s account. The bank has already withdrawn the funds from the purchaser’s account, or accepted cash, and holds them in its own reserves. This security makes its cancellation or replacement a more involved process than stopping payment on a personal check.
Reporting a Lost Cashier’s Check
Upon discovering a cashier’s check is missing, immediately contact the issuing bank. The bank will require specific details about the lost check for replacement or refund. This information typically includes the check number, issue date, amount, and names of the purchaser and payee. Providing purchase details also helps the bank locate the transaction efficiently.
The bank will require the customer to complete and sign a formal document, often a “declaration of loss” or “affidavit of lost check.” This sworn statement confirms the check is lost, has not been negotiated, and will not be presented for payment. It is a legally binding assertion that the original check is no longer in the customer’s possession. Customers should obtain this form directly from the issuing bank and fill in all informational fields.
The Indemnity Requirement
Replacing a lost cashier’s check involves indemnity, which protects the issuing bank from financial loss. The bank faces a risk of double payment if the original check surfaces after a replacement or refund. To mitigate this risk, banks require the customer to provide indemnity, ensuring the bank is held harmless if the original check is later presented.
An “indemnity agreement” is a contractual promise by the customer to reimburse the bank if the original lost check is ever paid. By signing this agreement, the customer takes responsibility for any financial consequences should the original check be mistakenly honored. This agreement legally binds the customer to cover the bank’s loss.
For larger amounts, the bank may require an “indemnity bond” in addition to an indemnity agreement. An indemnity bond is a guarantee from a third-party surety company that covers the bank’s loss if the original check is paid after a replacement or refund. Obtaining an indemnity bond involves contacting a surety company and paying a premium, which can range from 1% to 2% of the check’s value, often with a minimum fee of $25 to $50. This bond provides additional financial security for the bank, ensuring funds are available to cover any double payment.
Issuance of a Replacement or Refund
Once the declaration of loss and indemnity requirement are fulfilled, the process moves towards issuing a replacement or refund. Banks, guided by Uniform Commercial Code Section 3-312, typically impose a 90-day waiting period from the loss report date. This allows time for the original check to surface and be presented for payment, protecting the bank from double liability.
After this waiting period expires, the bank confirms all necessary documentation and indemnity measures are in place, then proceeds with issuance. The bank verifies the original check has not been presented for payment during the waiting period. This ensures the bank’s financial obligations are clear before proceeding.
Banks commonly issue a new cashier’s check to the original purchaser or deposit the funds directly into their bank account. This completes the process, providing the customer with access to the funds from the lost check.
What to Do if the Original Check Appears
If the original lost cashier’s check reappears after being reported lost, or after a replacement or refund has been issued, immediately notify the issuing bank. Timely communication prevents complications and ensures compliance with the terms of the lost check declaration and indemnity.
Attempting to cash or deposit the original check after a replacement has been issued or after the bank has been indemnified can lead to serious consequences. Such an action could be considered an attempt to defraud the bank, potentially resulting in legal issues and significant financial liability. The bank could pursue legal action to recover the funds, and the individual might face criminal charges.
The proper procedure upon finding the original check is to promptly return it to the issuing bank. Banks will have a specific process for handling the return of such documents, often requiring the customer to sign a document acknowledging its return and cancellation. This action ensures that the bank’s records are reconciled and no further issues arise regarding the funds.