30 Day Rule for Forged Endorsement Affidavits

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Question:

We seem to be having an issue with forged endorsement affidavits. When attempting to send a request to the bank of first deposit, the bank will deny the claim if the affidavit is over 30 days old. The one bank who does it most often has told us that is the law but can't provide any documentation to support. Are forgery affidavits expired after 30 days or is this the individual bank's discretion?

Answer:

Assuming that your state has adopted to model language of the Uniform Commercial Code, the answer is in Section 4-208.

(e) The warranties stated in subsections (a) and (d) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the warrantor is discharged to the extent of any loss caused by the delay in giving notice of the claim.

Note that the law does not say that the affidavit expires. It says that the bank of first deposit does not have to pay the claim if your delay in notifying them of the breach of warranty would result in a loss for them that would not have occurred if you had provided timely notification. The moral of the story is, "Don't sit on an affidavit of forged endorsement."

First published on BankersOnline.com 10/24/11