Personal Finance (Not Investing) • Contractor lost check, wants new one; how can I protect myself?

I hired a contractor to do some work this summer. He handed me the bill at the end of the job, and I handed him a check for the full amount due. The check never posted to my account.

Now, a month or so later, the contractor called and said that he had cashed the check but that it never posted to his account. He wanted to know if my bank had contacted me about it. Had it had been flagged for fraud, had it bounced, etc.? My bank never contacted me about it, there are no alerts in my account, and there are sufficient funds in the account to cover the check. The most likely explanation, of course, is that he lost it. In any case, as far as I know, the check is gone.

I have no reason to suspect fraud, but I still want to protect myself. My understanding is that, because he never got the funds, the debt wasn't technically paid, so I'm still on the hook to pay him. However, a person who accidentally loses a check for thousands of dollars may also be a person who accidentally cashes it later.

My understanding is that banks are only required to honor checks for six months, but they're free to accept ones that are older. My understanding is also that I can put a stop on the check, but banks are only required to honor those for six months. I don't want to have to repeatedly stop this check. I could close the account, but that's a hassle for me.

What can I do to protect myself? I was thinking of having him sign something that says:

• I submitted payment for this debt on time and in full
• The payment was in the form of a personal check, numbered 123
• Check 123 was lost by him
• Check 123 is no longer considered valid for this debt, or any other debt, or any gift, or anything else
• Check 123 will not be cashed if later found
• Check 123 will be returned to me if later found
• Check 123 will be destroyed by me if later found
• A new payment is being made, replacing, not in addition to, check 123
• The payment is in the full amount minus a stop check fee
• The new payment is in the form of a personal check, numbered 456
• The new payment is considered on time and in full

I'd have both of us sign it, maybe in front a notary in town who knows both of us.

What do you think?

Statistics: Posted by almeida — Sun Sep 01, 2024 9:47 am — Replies 13 — Views 781

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