Checks and What You Need To Know
I have always been fascinated by how many laws and regulations are involved when I write just one single check! For instance, I write a check at the grocery store for $50. I hand that check to the clerk, and that check begins a journey through State and Federal Laws that are so extensive that whole law school courses are devoted to it!
I took a course on Article 3 of the Uniform Commercial Code (UCC). That is the Federal law that govern how your checks are to be written, endorsed (signed) and cashed. I do not recommend reading the UCC, unless you are a lawyer, banker or CPA taking a class. But today I want to share a few interesting tidbits about how the checks you write today are handled
For instance, do you know how many such checks are written in the US? It is an astronomical number! Government checks processed by the Federal Reserve in 2017 numbered 56 million! And although the ‘average’ check was $2,595, the total funds processed was 146 Billion; yes, that is B with a ‘Billion!’
What if the check was for $50 to the man who mows your lawn, and he does not cash it? It sits in your checkbook ledger as uncashed, and it bothers you every month when you balance your checking account statement. Aside from that monthly hassle factor, when can you tell Mr Lawn Man he lost his right to be paid?
My condolences to Seinfeld fans. The episode where Jerry cashes in 20 years of birthday checks does not work in the real world of banking. Unless otherwise specified, checks expire after exactly 180 days. If Mr Lawn Man has not cashed your check after six (6) months, you can write it off and keep your money!
Sometimes a client tells me that their client wanted to ‘post date’ a check to a future date. They ask me if it stops them from cashing it, either now or at the future date.
The person hoping that post dating a check will save them from bouncing a check is incorrect. Not kinda sorta incorrect; but totally incorrect. The check cashing laws that govern the bank do not prohibit a bank from clearing a check before the date on the check fact. In fact, for smaller checks, no human even reads that date (remember how many checks are running through the system every day; it would be physically impossible to read each and every check with a human eye). So I can write you a check now and date it for a year from now, and the bank will process it today for you!
As we all know, there are two sections of the check to indicate the amount of money being transferred. There is a space where you put the amount of the check in numbers and another section where you write out the amount in words. What happens if they don’t agree?
That big law called the UCC has an answer; the amount written out in words prevails. The assumption is that it takes more consideration to write out a number in words and therefore, less likely to be erroneous.
If you would like more blogs about legal topics, the UCC or checks, feel free to write a check to retain Rignanese & Associates; we can help you save time, trouble and money by doing a proper estate plan, business plan or assisting with a real estate transaction.
Rignanese & Associates is available to work with clients on their unique situation. Please reach out to us at our new headquarters at 203 Avenue A, NW, Suite, 101, Winter Haven, Florida 33881 at 863.294.1114.