The Common Law

The new year often brings about a renewed commitment to organizing our financial affairs. So during the month of January, The Common Law will focus on issues that affect your finances. We start with some common issues that can arise with your bank:

I called my bank last week and asked them to stop payment on a check. They refused to do it over the phone and insisted that I submit a written request. It just seems like a hassle that I can't stop payment on the check over the phone. Is the bank correct?

Yes. Under Texas law, an oral request to stop payment on your check is not legally binding on your bank. While some banks may have policies that allow them to stop payment without a written request, it is always a good idea to submit a written stop-payment request to be sure that the bank will comply with your wishes. The request should include your name, account number, and the number of the check that you want to stop payment on. You may want to drop the letter off in person to speed up the bank's response.

I was reviewing my old bank statements, and I think one of my old roommates may have forged a few checks on my account. If that is the case, will my bank hold me responsible for the amount of the checks?

It depends. As a general rule, a bank cannot use money from your account to cover a check that was signed with your forged signature. This assumes, however, that you did not do anything negligent to allow the forgery to happen, in which case you could be liable for the check. More importantly in your situation, you only have one year to report the forged check to your bank, and failure to do so can result in your account being charged for the check. Contact your bank immediately to report the forged check, and try to keep a closer eye on your bank statements in the future.