Certified Check Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Certified Check, written in plain English, along with examples of how it is used.
What is Certified Check?
(n) Certified Check is the check drawn by a customer of a bank which has been duly certified by the bank establishing enough balance in his account when the check is presented for payment. A certified check assures prompt payment as the bank will enmark the required amount to pay the certified check until its validity.
History and Meaning of Certified Check
A certified check, also known as a cashier's check or bank check, is a type of check issued by a bank. The bank verifies that the check is legitimate and that the account holder has sufficient funds to cover the check's amount. The funds are then set aside, and the check is marked as "certified" or "guaranteed."
This process was first introduced in the early 19th century in Europe and was later adopted by American banks in the mid-1800s. Certified checks were initially used to provide a secure method of payment for large sums of money, such as purchasing property or settling debts.
Examples of Certified Check
- John needs to pay for his new car in full, but the dealer does not accept personal checks. John requests a certified check from his bank, and the bank verifies that he has enough funds in his account and issues him a certified check for the full amount.
- Mary is selling her house and requires a certified check as the down payment from the buyer to ensure that the funds are legitimate and secure.
- The company is making a large payment to a supplier but cannot issue a wire transfer due to technical difficulties. Instead, they request a certified check from their bank to ensure the payment is processed promptly and securely.
Legal Terms Similar to Certified Check
- Cashier's Check: A type of check issued by a bank and drawn on its own funds, rather than the account holder's funds.
- Traveler's Check: A type of check that can be used as a form of payment while traveling, issued by banks or other financial institutions.
- Money Order: A printed order for a specified amount of money, typically issued by the post office, banks, or other financial institutions.