What Happens If a Check Expires?

Checks, unlike physical currency, possess a finite lifespan. They are financial instruments with an implied or explicit expiration, after which they may no longer be honored by a financial institution. This introduces considerations for both the payee (the individual receiving the check) and the issuer (the entity that issued it). Understanding the implications of an expired check is important for managing personal and business finances, preventing potential losses, and ensuring smooth transactions. This article explores check validity periods and outlines actions payees and issuers should take when a check expires.

How Long Checks Remain Valid

Most personal and business checks are valid for six months from their issue date. This guideline is recognized under the Uniform Commercial Code (UCC), which states that banks are not obligated to honor a check presented more than six months after its date. This is a discretionary guideline, meaning a bank retains the option to honor a check older than six months, especially if there are no concerns about fraud or insufficient funds. A bank might consider factors such as the customer’s relationship with the bank and recent account activity when deciding whether to accept a stale-dated check.

Certain types of checks operate under different validity periods. Checks issued by the U.S. Treasury remain valid for one year from their issue date. State and local government checks typically have validity periods ranging from six months to a year, depending on the jurisdiction’s laws. Certified checks and cashier’s checks generally do not have a strict expiration date, as the funds are guaranteed by the issuing bank. However, some banks may print “void after” dates on these checks. Post-dated checks become valid on or after the date written on them, and their validity period is three months from that future date.

What Payees Should Do

If a payee has a check that has passed its validity period, it is considered stale-dated. While a bank is not legally required to honor such a check, it may still choose to do so. Attempting to deposit or cash an expired check carries the risk of it being rejected by your bank or the issuing bank. If a bank accepts an expired check for deposit, it might later return the check unpaid, potentially incurring fees for the payee.

The most effective course of action for a payee with an expired check is to contact the person or entity who originally issued it to request a new check. When making this request, providing details such as the original check number, amount, and date can facilitate the reissue process. Many issuers are willing to provide a replacement check, particularly if the original funds were never disbursed from their account.

Banks have discretion in honoring stale checks. Even if your bank initially accepts the check, the issuing bank may still refuse payment. If a new check is not obtained, the funds represented by the expired check will remain with the issuer. These funds may become subject to unclaimed property laws if they remain uncollected for an extended period.

Considerations for Check Issuers

For the entity that issued a check, an uncashed, expired check means the funds remain within their bank account. Issuers should regularly reconcile their bank statements and outstanding check registers to identify any checks that have not been presented for payment. This practice helps maintain accurate financial records and ensures funds are appropriately accounted for.

Issuers can place a stop payment order on an uncashed check, even if it has already expired. A written stop payment order is effective for six months and can prevent the bank from honoring the check if it is later presented. While this provides an added layer of security, stop payment orders expire and may need to be renewed if the check remains uncashed for longer periods.

If an uncashed check’s funds remain with the issuer for an extended period, they may become subject to state unclaimed property laws. These laws require businesses to remit abandoned property to the state. The dormancy period varies by state and property type but ranges from one to five years for uncashed checks. Payroll checks might have a dormancy period as short as one year, while other checks could be three to five years.

Before remitting funds to the state, issuers are required to perform due diligence. This involves making a good-faith effort to contact the original payee at their last known address before the funds are due to be escheated. If the payee does not respond, the issuer must report and remit the funds to the appropriate state’s unclaimed property division. Maintaining thorough records of all issued checks, including those that expire and any actions taken regarding them, is important for compliance with these regulations.