Who profits from uncashed cashier's checks?

Question

It's my cousin's birthday. I can't think of a suitable gift. I go to the bank and get a draft (cashier's) check for $100 payable to my cousin. (It's an example scenario. No need to compare it with personal checks or with gift certificates.)

On the birthday, I give the check as a gift. My cousin puts it in a folder "to be processed on the next trip to the bank" but forgets about it. The check is never cashed.

What happens to the money? The bank doesn't even know how to contact my cousin (they just have a name). Suppose I'm still a customer of the same bank many years later. Will they contact me eventually and say "your $100 were never cashed, please come pick them up"? Will they wait 75 years and give the money to the state, as with dormant accounts whose owners vanish? Is the money a profit for the bank, until/unless cashed?

Answer 1

Most likely the bank will keep it on file for a few years then turn it over to the state as "unclaimed property". I can't speak for all states though.

Answer 2

A number of years ago a cashiers check I used for an earnest money deposit on a property I was buying was un-cashed 30 days later. My Credit Union contacted me, and then I reached out to the escrow company to see what the issues was. I was glad that the Credit Union contacted me, because there were other issues with the transaction.

Talk to your financial institution, see what their policy is. They may have to follow local laws.

Even though it wouldn't help in this situation, always have your name included with an "or" on the check so if you do need to reissue a new one you can redeposit the funds.

Answer 3

If the recipient never cashed the check, the money continues to be the bank's, just as if you had written s normal check that didn't get cashed the money would sit in your account.

FALSE. The money is a secured transaction (promissory note) to the bank via the requester to process a secured funded check. The bank usually has its rules amended to hold a secured check to meet State regulations. Most states have regulations regarding unclaimed secured checks which are sent to the state's department of recovery after two years if left unclaimed. The funds are then in recovery back to the requester.