What Happens If a Cashier’s Check Is Lost?
If your cashier's check is lost, learn the critical procedures, bank agreements, and common resolutions to secure a replacement.
A cashier’s check is a financial instrument issued by a bank or credit union, drawn on the institution’s own funds, rather than a customer’s personal account. This makes it a secure form of payment, as the bank guarantees the funds are available and will clear. It is often preferred for large transactions, such as real estate down payments or vehicle purchases, where the recipient needs assurance of payment. Losing such a check requires specific steps to resolve.
Reporting a Lost Cashier’s Check
Upon discovering a cashier’s check is lost, the immediate and most important action is to contact the issuing bank. The bank will require specific details to identify the lost instrument and initiate a claim.
To facilitate the process, be prepared to provide the bank with key information about the check. This includes the check number, the exact amount, the date it was issued, and the name of the payee. Providing your identification details as the purchaser is also necessary.
The bank will ask you to complete a “declaration of loss” form. This is a formal, sworn statement affirming that you have lost possession of the check and cannot reasonably obtain it. Filing this declaration is a fundamental step in asserting a claim for the lost funds and preventing the original check from being fraudulently cashed.
The Indemnity Agreement
The bank will require an indemnity agreement before proceeding with a replacement or refund for a lost cashier’s check. This agreement is a legal contract designed to protect the bank from financial loss if the original check is later presented and honored. Since cashier’s checks are drawn on the bank’s funds, the bank could potentially be liable for paying both the original and a replacement check if proper precautions are not taken.
The indemnity agreement ensures that the purchaser or claimant agrees to reimburse the bank if the original check is found and cashed after a replacement has been issued. This shifts the risk of a double payment from the bank back to the individual. Banks may also require the purchase of an indemnity bond from a surety company, which acts as an insurance policy for the bank against such a loss.
A waiting period is typically associated with the process, often around 90 days. This period allows time for the lost check to potentially surface or be presented for payment, reducing the risk of a fraudulent claim. The Uniform Commercial Code (UCC) provides a framework for these situations, allowing banks to refuse payment on a lost check after a certain period if a proper claim and declaration of loss have been filed.
Issuing a Replacement Check
Once the declaration of loss has been submitted and any required indemnity agreement or bond is in place, the process for issuing a replacement check can move forward. After the designated waiting period, which is commonly 90 days, the bank will verify that the original check has not been presented for payment.
The bank will then issue a new cashier’s check or, in some instances, refund the amount directly to your account. While the process can take time due to the necessary waiting periods and verification steps, the funds are not permanently lost.
Potential Issues and Resolutions
If the original check is found before a replacement is issued, it should be immediately returned to the issuing bank. This action typically halts the replacement process, and the original check can then be used as intended, or the funds can be returned to your account if no longer needed.
If the original check is found after a replacement has been issued but before it is cashed, the original check is now void and should not be used. It is advisable to destroy it or return it to the bank for cancellation to prevent any confusion or potential for fraudulent activity. Attempting to cash both checks would lead to serious financial and legal consequences.
In the unfortunate event that the original check is fraudulently cashed by someone else after an indemnity agreement has been signed and a replacement issued, the indemnity agreement comes into effect. The bank, having paid on both checks, will seek reimbursement from the individual who signed the agreement. This highlights the importance of understanding the terms of the indemnity agreement and the liability assumed.
Banks may charge fees for stop payments or for issuing replacement checks. These fees can vary, but generally range from a few dollars up to $30 or more.