A cashier’s check is a check guaranteed by a bank, drawn on the bank’s own funds and signed by a cashier or bank officer. Cashier’s checks are treated as guaranteed funds because the bank, rather than the purchaser, is responsible for paying the amount. However, the depositing bank is required to treat only cashier’s checks of $5,000.00 or less as cash; it may place a multi-day hold on checks greater than that amount. It is ironic that parties who used to rely on the safety of these checks now have to be more careful than ever. Parties accepting them can no longer simply assume that a cashier’s check is always just as good as cash.
Because they are treated as guaranteed funds by the bank, there are certain risks inherent in their use. For example, if cashiers checks are lost, stolen or misplaced, the issuing Bank CANNOT STOP PAY on them. Not being able to be stopped is one of the advantages that encourages parties to accept them. Under Florida law, banks are not required to replace lost or stolen cashiers checks for 90 days. So if something happens to your check between the bank and the closing office, your real estate deal will likely be dead. And, if the original check is presented to the bank later by a “holder in due course”, which basically means an endorsee who had no knowledge the check was lost or stolen and accepted it in good faith, then the bank has to pay it also, and will look to you for reimbursement for the double payment.
Cashier’s check fraud is one of the most popular crimes in the internet age. Technology has made them easy to counterfeit. Counterfeit cashiers checks are very common, and the staff at Mason Title has seen them several times. A quick Google Internet search will reveal the details of the scams, but here is a link to a recent counterfeit check scam in the Florida title industry:
Caution should be exercised both by the parties using cashiers checks and parties accepting them.