Time Limits for Returning Checks Without Entry

Question:

Is there a time limit to honor a check being returned without entry? Clearly the check was not endorsed properly, but returned 3 months later. It also was not returned through Fed. but was sent directly.

Answer:

Banks can always return items "without entry" or "bank to bank;" use of the clearing system to return items is generally a matter of convenience and speed, not a requirement. The restrictions are on the reverse side; e.g. you can no longer use the clearing system to assert breach of warranty claims - you must go bank to bank.

Beyond that, I do not have enough information to be certain about the fact situation. If the check was returned "improper" or "nonconforming" endorsement due to an obvious problem, it should have been returned by midnight of the banking day following the banking day of presentment. If there was no payee endorsement and the paying bank is coming back to you for a breach of warranty claim, that can often be done up to three years after the item was presented for payment.

First published on BankersOnline.com 4/01/02