A recently enacted Illinois law requires township and road district clerks who issue payouts from a township or road district fund to “attest” to such payments. Should banks be concerned about honoring checks or instructions for other forms of payments (such as wires or ACH transfers) on these accounts without a clerk’s attestation? Should we treat the clerk as an authorized signer on the township or road district account?

No, we do not believe that banks need to check for a clerk’s attestation before making payments on behalf of an Illinois township or road district customer. We also do not recommend unilaterally altering your signature cards for these customers to add their clerks as authorized signers, as the new law does not grant them any payment authority (that would be up to the individual township or road district customer).

Beginning January 1, 2019, the new Illinois law requires township and road district clerks to “attest” to each payment from township and road district funds. Township and road district clerks may meet their attestation requirements by signing or stamping each check, and in our view, with respect to wire and ACH transfers, by internally and contemporaneously documenting each attestation. Importantly, though, however they choose to do it, this is the responsibility of the township or road district, not of the bank. The law does not require banks to ensure that their township and road district customers are complying with the new law by confirming their clerks’ attestations.

Accordingly, from the bank’s perspective, we recommend treating Illinois township and road district checks and electronic transfers that are signed or authorized by the account’s authorized signer as appropriate instructions to make payments from their accounts, even in the absence of clerk attestations. We believe this is a particularly important point for checks, which remain “properly payable” under the Illinois Uniform Commercial Code (UCC) even without the attestation (unless otherwise stated in the account agreement), so that refusing to honor them could constitute wrongful dishonorment under the UCC.

For resources related to our guidance, please see:

Effective January 1, 2019: Township Code, 60 ILCS 1/7-27 (“Attestation to funds endorsed by the supervisor. If a township supervisor issues a payout of funds from the township treasury, the township clerk shall attest to such payment.”)

Effective January 1, 2019: Illinois Highway Code, 605 ILCS 5/6-114.5 (“Attestation to funds endorsed by the supervisor. If a township supervisor issues a payout of funds from the township treasury, the township clerk shall attest to such payment.”)

Effective January 1, 2019: Public Graveyard Act, 50 ILCS 610/2c(c) (“If a township supervisor issues a payout from the township treasury for any purpose described in this Act, the township clerk shall attest to all moneys paid out.”)

Illinois UCC, 810 ILCS 5/4-401(a) (“A bank may charge against the account of a customer an item that is properly payable from that account even though the charge creates an overdraft. An item is properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and bank.”)

Township Code, 60 ILCS 1/35-50.6 (“The township supervisor shall be ex officio treasurer and the custodian of all funds derived from the issuance and sale of bonds under Sections 35-50.1 through 35-50.6 and of all income and revenue derived from the operation of the senior citizens' housing. . . .”)

Township Code, 60 ILCS 1/70-60 (“In each road district comprised of a single township, the township supervisor shall be ex officio treasurer for the road district and shall execute a bond and have powers and duties as provided in Article 6 of the Illinois Highway Code.”)

Township Officials of Illinois, New Law Requires Clerks to “Attest” All Township Payments (“2) How do I ‘attest’ a signature on payouts? Clerks will now sign their name along with the authorized signature (the Supervisor/Road District Treasurer) on all checks or other financial documents which reflect a payout from Township or Road District funds. The role of the Clerk remains the same as it does on any other official documents — they are simply witnessing or attesting to the authenticity of that authorized signature. From a practical standpoint, before January 2019, we encourage Supervisors to reach out to their banks to notify them of this change in the law and ask their preference on whether (or not) to add the Clerk’s signature to account signature cards. In conversations with various bankers, it is quite possible your bank will not require the Clerk’s signature to be added. This is particularly true in light of question #3. . . .”)

Township Officials of Illinois, New Law Requires Clerks to “Attest” All Township Payments (“3) Can the Clerk now write checks on their own? NO. Again, the Clerk is still simply serving as a ‘witness’ to the payment. The Clerk has NO authority to write a check, and they will have NO legal (or ‘fiduciary’) responsibility related to the payment of funds. In fact, this may be the reason why some banks will NOT want to add Clerks to a signature card(s). Obviously, the Supervisor and Clerk will have to coordinate their schedules to make sure they are both available to sign all checks in a timely fashion to avoid any late penalties associated with Illinois’ Local Government Prompt Payment Act.”)

Township Officials of Illinois, New Law Requires Clerks to “Attest” All Township Payments (“6) What about those payments we make without a check? ‘E-checks’ and other electronic payments are being used on an ever-growing basis. Clearly, there should be protocols in place for the ‘authorized signature’ already. Much like a bank, you should notify and work with the vendor(s) that handle your electronic payments to make sure they understand the new law and ask for their input on if they require any changes on their end. If the software or provider does not allow for the Clerk to attest, a similar plan for documenting the use of a rubber stamp makes sense here, too.”)