When a financial institution issues a certified check, it converts cash into the form of the check. Legally, the bank has to honor the check when presented for payment by the payee. Generally, banks cannot place stop payments on certified checks as doing so would contravene banking laws detailed in the Uniform Commercial Code, which serves as the basis for banking laws in the United States.
Uniform Commercial Code
The Uniform Commercial Code states that if a bank refuses to negotiate a certified check or places a stop payment on it, the person presenting it can seek compensation from the bank. The person attempting to cash the check must contact a local attorney and then inform the bank of the damages due as a result of the non-payment. The bank can either agree to cash the check at that time or refuse to do so, in which case it must pay damages.
There are some situations in which a bank can refuse to cash a certified check or stop payment on it without having to pay damages to the person presenting it. The bank can refuse payment it if it has a legal basis for refusing payment. If paying the check would contravene state law, the bank can also refuse payment. Bank employees who do not believe that the person presenting a check has a right to cash it can refuse payment until that person provides a valid form of identification to establish her identity.
If a bank customer purchases a certified check but subsequently loses it or believes it to have been stolen, the bank can cancel the check after a period of 90 days. When this occurs, the bank places a stop payment, cancels the entire transaction and offers the check purchaser a full refund. The same rules applies to teller-issued checks and bank official checks.
90-Day Presentment Issues
Legally, you can get a refund of a certified check 90 days after you wrote it if your bank has not paid it. However, if after your refund occurs, another bank sends the check to your bank seeking payment, you may have to repay the bank. This only occurs if another bank negotiates the check within 90 days of you buying it. It can take 11 days for a check to pass from one bank to another for collection, and misdirected checks can take even longer. Therefore your bank might not find out that another bank cashed it until weeks after refunding your money.