Topic: Uniform Commercial Code
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One of our customers is complaining that we improperly cashed a cashier’s check payable to “John and Jane JTWROS.” It was issued in July of 2002, and we cashed it for John in August of 2002. The customer, Jane, is complaining that we cashed the check without her signature. We believe that only one signature was required because it was payable JTWROS. Does Jane have a claim?
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Under the Uniform Commercial Code (UCC), your customer had three years in which to bring a claim for conversion of the cashier’s check or for breach of a warranty by your bank. Without commenting on your bank’s conclusion that Jane’s endorsement was unnecessary, we believe that any claim she may have is no longer be…
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Are there any Illinois State laws regarding original check retention? Can we image a check and destroy the original as soon as we know we have a clear electronic image? I am not aware of any federal regulations requiring retention of an original check and I want to make sure Illinois law is the same.
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Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021. Please note that this change may affect the continued accuracy of this guidance as it pertains to the ECSA. No, we are not aware of any required retention periods for original checks in…
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The executor for an estate has presented us with a check payable to “Jane Doe, as Executor of the Estate of Julie Doe, deceased, acting with full authority under the Independent Administration of Estates Act, Superior Court of California.” She wishes to deposit the check into her personal account under her name, not an estate account. The check represents funds from the sale of the decedent’s house, and the executor tells us that the estate already has closed. Can we allow her to deposit the check into a personal account?
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No, we do not recommend permitting the customer to deposit a check made payable to her as the executor of an estate into her personal account. This transaction could result in a breach of the Uniform Commercial Code (UCC) warranties. When delivering the check to the payor bank for payment, the UCC would require your…
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Our bank sends checks to the family in order to honor deceased customers. If such a check never is cashed, even after we attempt to contact the deceased customer’s family, what procedures should we follow?
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If such a check remains uncashed and undeposited for three years, your bank must report the check to the Illinois Treasurer as unclaimed property. Under the new Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), a check on which your bank is directly liable will become reportable as unclaimed property when three years have passed…
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One of our commercial customers had several forged checks drawn on their account. One check was written on June 8. The check cleared our bank on June 13. The customer received a statement showing the check on June 30, and they notified us that the check was fraudulent on July 10. We returned the check to the depository bank (a credit union) on that day. The credit union submitted a late return claim to the Fed, which initially credited the credit union but reversed the credit after we submitted documentation. The credit union claims that we made a late return under Section 4-302 of the Uniform Commercial Code (UCC).
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We believe that the credit union is correct that the check was a late return under the Uniform Commercial Code (UCC), because your bank returned the check after the midnight deadline. As we understand the Fed’s process for late returns, it would have revoked its credit to the credit union if it could not obtain…
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We sometimes process withdrawal tickets without a customer’s signature. They instead are filled out by a banker and state “Per (Banker Name)” or “Per Phone Conversation” on the signature line. In some cases, the teller makes out a cashier’s check for the withdrawal, and in other cases, the teller withdraws cash, and the cash sits at the bank until the customer comes in. Should we be accepting these withdrawal tickets?
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We are not aware of any law or regulation prohibiting this practice, but there is a risk a customer could claim that a withdrawal ticket was unauthorized and demand a refund. If your bank does not have a written request corresponding with these withdrawal tickets, it may be difficult to prove that they were authorized…
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Our account agreement permits us to close an account “at any time upon reasonable notice” to the customer and tender of the account balance. We also may close accounts immediately in cases of suspected fraud. We would like to close one particular account due to a number of issues (excessive overdrafts, tax levies, etc.), but not due to suspected fraud. In that case, what is the definition of reasonable notice to the customer?
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We recommend providing at least thirty days’ notice before closing an account when your agreement requires “reasonable notice” without specifying a timeframe, unless you suspect fraudulent activity or otherwise are expressly permitted to do so with less or no notice by your account agreement. We are not aware of any laws or court decisions that…
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We have a check payable to “John Doe, Mary Doe, Joint Tenants.” Do both John and Mary need to endorse the check, even though “AND” isn’t actually printed on the check?
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No, based on these facts, you do not need to obtain the endorsements of both John and Mary, notwithstanding that the check appears to have been made payable to both of them in their account held in joint tenancy. The Uniform Commercial Code (UCC) provides that when a check made payable to two or more…
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We are offering a new savings account where we disclose that we will automatically send electronic account statements unless the customer opts to pay a small fee for paper statements. Some customers have indicated that they don’t want either electronic or paper statements. Can we honor that request? The savings accounts can receive electronic funds transfers.
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No, we do not believe that it would be appropriate to honor a customer’s request to not send statements for a deposit account, due to federal and state laws pertaining to electronic fund transfers, as well as checks. For any account that allows electronic fund transfer (EFT) activity, Regulation E requires monthly periodic statements for…
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Our customers executed a small estate affidavit to settle the estate of their deceased son, who did not have an account with us. Subsequently, the parents received a tax refund check from the State of Illinois made payable to their son. Can the parents cash the check made out to their son?
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We believe that the appropriate course of action for your customers is to file a claim for the refund from the Illinois Department of Revenue (Illinois DOR) using Form-1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. We spoke with a representative from the Illinois DOR, who advised that submitting a Form-1310 would be…