Right of offset by bank

[faithnlve]

What is the name of your state (only U.S. law)? VT. Need help! My brother was out of town and his son received a check from my brother's insurance company. The check was written out to my brother and to the company the insurance was paying for work done. My brother told his son to write deposit only on back of check since he was out of town and deposit it. (my brother did not know insurance check was to be signed by him and contractor who did work). Anyways, when my brother got back from out of town he used the money deposited to do some more work on his house from the water damage. He thought it was a check from his insurance to him for coverage from damage and would disperse payments to contractors as they fixed stuff. 1 month later the bank closed his account and took the 3,000.00 left in his account out. When my brother called the bank to see what the heck was going on the bank told him the contractor's whose name was also on the check he had his son deposit the previous month was due to contractor. So the bank wrote "this" contractor a bank check, closed my brothers account and took remainder of his money to offset the banks personal check to contractor. It gets better. The bank gave the contractor a check in both my brother and his name which totaled the amount deposited from check deposited a month ago, and the contractor signed his AND my brother's name to cash check. Can the bank do this? Can they use the right of offset in this situation? What can my brother do? Thanks so much. Faith

 

[justalayman]

Right of offset? It appears they have simply reversed an illegally deposited check.

I do see a problem with the check being reversed AND a check being written to your brother and the contractor though, especially since the bank has no authority to do so.

Then, if the contractor cashed the check without your brothers signature, your brother needs to contact the issuer of the check and report the situation. Either his signature was forged or the bank that paid the check did so without a valid endorsement (lacking your brother's signature) which is improper.

Your brothers bank was in error in depositing the original check as well.

 

[Antigone*]

What is the name of your state (only U.S. law)? VT. Need help! My brother was out of town and his son received a check from my brother's insurance company. The check was written out to my brother and to the company the insurance was paying for work done. My brother told his son to write deposit only on back of check since he was out of town and deposit it. (my brother did not know insurance check was to be signed by him and contractor who did work). Anyways, when my brother got back from out of town he used the money deposited to do some more work on his house from the water damage. He thought it was a check from his insurance to him for coverage from damage and would disperse payments to contractors as they fixed stuff. 1 month later the bank closed his account and took the 3,000.00 left in his account out. When my brother called the bank to see what the heck was going on the bank told him the contractor's whose name was also on the check he had his son deposit the previous month was due to contractor. So the bank wrote "this" contractor a bank check, closed my brothers account and took remainder of his money to offset the banks personal check to contractor. It gets better. The bank gave the contractor a check in both my brother and his name which totaled the amount deposited from check deposited a month ago, and the contractor signed his AND my brother's name to cash check. Can the bank do this? Can they use the right of offset in this situation? What can my brother do? Thanks so much. Faith

Faith, this is not the right of offset and it seems to me like the bank overreacted when they closed your brother's account IF this is the only OD the account has had. The check should have been returned to your brother once he returned the funds to the account. I don't see how the bank gave the contractor a new check, the insurance company may have given the contractor a new check but the bank had no authority to act that way on the payor's behalf.

Here is the thing, you are a third party and I sincerely doubt you have all the facts as they truly are. Ask your brother to sign up and give us the facts and the details are they are not as you believe them to be.

 

[faithnlve]

Bank "did" issue a bank check to the contractor since the contractor demanded the money claiming it was his money as well. (needed both my brother and contractor's signature). Once the bank issued this bank check, they took my brothers remaining balance of 3,000.00 closed his account and reported him to chex systems. All this was done with zero notification to my brother. When he called the Banking and Insurance of our state they told him the bank had every right to correct the situation as it deemed appropriate. 4 months later my brother received a copy of this bank check (since bank's check needed both signatures again) and found his name was forged. Ugh what a friggin mess! The bank now wants my brother to report to police of forgery and are going to charge my brother 14,000.00 for what they claim he owes the bank for the check "they". Now what?

 

[Zigner]

Bank "did" issue a bank check to the contractor since the contractor demanded the money claiming it was his money as well. (needed both my brother and contractor's signature). Once the bank issued this bank check, they took my brothers remaining balance of 3,000.00 closed his account and reported him to chex systems. All this was done with zero notification to my brother. When he called the Banking and Insurance of our state they told him the bank had every right to correct the situation as it deemed appropriate. 4 months later my brother received a copy of this bank check (since bank's check needed both signatures again) and found his name was forged. Ugh what a friggin mess! The bank now wants my brother to report to police of forgery and are going to charge my brother 14,000.00 for what they claim he owes the bank for the check "they". Now what?

Your brother will need an attorney