Is my bank to blame for cashing my check?

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Dear Dr. Don,
I wrote a check to a nonlicensed contractor to work on my rental property. Of the three checks issued to him, the last one stated “final” payment on the check. My wife gave the contractor the check at the job site. He immediately left the job site and headed to my bank. I went to check his work a few hours later and discovered that he did not finish the work and he damaged my property. I came home and tried to stop payment online. Unfortunately, it indicated that the check had already been cashed.

I contacted my bank the next day and found out that the contractor tried to cash it but the teller refused because she was not able to verify it with me. That’s because the contractor was not a customer of my bank and that the amount was close to $2,000. The contractor then went to another branch of my bank and was able to cash the check. I feel that the bank is liable for failing to allow me to put a stop payment on the check. The bank should provide a safety net for its customers. Instead of refunding my money, the bank offered me a $100 gift card. I declined. Do I have a case against the bank in a small claims court?

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Thank you,
— Leona’s Hubby

Dear Hubby,
I’m going to take the bank’s side on this one. For it to stop payment on the check, the order has to be in place prior to the check being presented for payment. You’re blaming the bank for something that was your responsibility, namely to make final payment only after work was completed and inspected.

A bank isn’t obligated to cash a check to a noncustomer that was written on one of its accounts, but it isn’t prohibited from doing so, either. You almost got lucky when the first branch refused to cash the check, but your luck ran out when the payee presented at another branch and cashed the check.

I’m not sure why the bank offered you a $100 gift card, but it wasn’t because it was wrong. That’s another questionable decision on your part. That $100 represented 5 percent of the loss that you might have recouped.

Whether writing “final” on the check had any bearing on what you still might owe the contractor is a separate matter. If the contractor comes to you for additional payment, you’d want to take this up with your attorney. I don’t think it’s going to happen after what you’ve described.

I don’t understand why you aren’t chasing down the “contractor” in small claims court instead of trying to pin this on the bank. Maybe it’s because he’s not licensed, bonded or insured.

It’s easy to see why the contractor went straight to the bank to cash the check. He was trying to get the check deposited during the business day. Banks typically have a set time when transactions processed are logged as the current day’s business. That cutoff time is often 2 p.m.

Sorry to say that I don’t have a ready solution to your problem. But your story should serve as a cautionary tale about only making final payments when work is truly completed.

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