Can I Put a Stop Payment on a Cashier’s Check?

Cashier’s checks are a secure form of payment, frequently used for substantial transactions where guaranteed funds are necessary. Unlike personal checks, which draw from an individual’s account, a cashier’s check is drawn directly on the issuing bank’s own funds. This provides a high level of assurance, making them a preferred instrument for purchases such as real estate down payments or vehicle acquisitions.

Why Stopping Payment is Complex

Stopping payment on a cashier’s check presents a distinct challenge. Because the funds for a cashier’s check are drawn from the bank’s own reserves, the check represents a direct obligation of the issuing bank. Once a cashier’s check is issued, the bank has already guaranteed the payment.

Stopping payment would essentially require the bank to revoke its own financial commitment. Such an action carries considerable legal and financial implications for the institution. Commercial law treats cashier’s checks as instruments that the issuing bank is generally obligated to pay upon presentation. Consequently, banks are highly reluctant to stop payment on these instruments due to their inherent liability as the issuer.

Conditions Under Which a Stop Payment May Be Considered

Despite the complexities, there are specific, limited circumstances under which a bank may consider a request to stop payment on a cashier’s check. These situations typically involve instances where the check is no longer in the proper possession or control of the intended recipient, or if the instrument has been compromised. The primary conditions for such consideration include the check being lost, stolen, or destroyed.

In cases of fraud, where the check was obtained or used through deceptive means, a bank may also consider a stop payment request. Banks will generally require strict adherence to specific requirements to evaluate such requests, ensuring the legitimacy of the claim before proceeding.

The Process for Requesting a Stop Payment

If a cashier’s check is lost, stolen, or destroyed, initiating a stop payment involves a precise set of procedural steps.

Initial Contact

The first action is to immediately contact the issuing bank to report the situation. During this initial contact, it is helpful to provide all available details about the check, including its number, the exact amount, the date of issuance, and the intended payee.

Required Documentation

A key requirement from the bank will be the submission of a sworn statement, often called an “affidavit of loss” or “declaration of loss.” This document, completed under penalty of perjury, attests that the check is no longer in the requestor’s possession, that the loss was not due to a transfer or lawful seizure, and that regaining possession is not reasonably possible because the check was destroyed, cannot be located, or is in the wrongful possession of an unknown person. Additionally, the bank will typically require the customer to sign an indemnity agreement or, for larger amounts, purchase a surety bond. This agreement protects the bank by ensuring the customer will reimburse the bank if the original check is later presented and honored.

Waiting Period

Following the submission of the required documentation, a waiting period is often imposed before a replacement check or refund is issued. This period, typically 90 days from the date of the check’s issuance, allows time for the original check to surface before new funds are disbursed. The bank places an alert on the original check during this time. The waiting period may sometimes be bypassed if a surety bond is obtained, which shifts the risk from the bank to the bond provider.

Implications and What to Expect

Requesting a stop payment on a cashier’s check carries several practical and financial implications. Banks typically charge a fee for processing such requests, which can range from $15 to $35 or more, depending on the financial institution and the specific services involved. Additionally, if a surety bond is required, there will be a separate cost for purchasing that bond, which varies based on the check’s amount and the insurer.

Should the original check surface and be presented for payment after a replacement or refund has been issued, the indemnity agreement comes into effect. Under this agreement, the individual who requested the stop payment is obligated to reimburse the bank for any funds paid out on the original check.

While stopping payment is possible under specific conditions, it is not a simple or guaranteed process. Banks generally avoid stopping payment unless the strict criteria related to loss, theft, destruction, or fraud are met.

In instances where a bank wrongfully refuses to pay a cashier’s check, the person entitled to enforce the check may have grounds to seek compensation. Resolving such disputes can be a complex and lengthy process.