check that certifies that the signature of the drawer is genuine and that
the depositor has sufficient funds on deposit for its payment.
The amount certified is then set aside for the express purpose
of paying the check and payment cannot be refused because of insufficient
funds. When a bank certifies
a check, certification is acceptance, i.e., the check becomes an obligation
of the bank, instead of being an order on the bank.
It is incorrect, however, to say that the bank guarantees payment
of the check.
Uniform Commercial Code (Sec. 3-411(2)) now makes specific the point that
unless otherwise agreed, a bank has no obligation to certify a check.
When a check is presented at the window for certification, the
drawer's account in the ledger is first inspected to see that sufficient
funds are on deposit to cover the amount which is immediately deducted
from the drawer's deposit balance before the check is certified.
Certification consists of stamping or writing across the face of
the check the word "certified" or "accepted", together with the date,
the bank's title, and the signature of the officer authorized to make
a certified check becomes an obligation of the bank, when a check is certified,
the drawer's account is reduced (charged) and the certified checks account
in the general ledger is increased (credited).
When certified checks are returned through the clearinghouse or
other channels, the certified checks account is reduced (charged).
Thus the balance of this account represents the total certified
a bank is not obliged by law to certify checks for its customers, among
the banks in the larger cities, especially in
check may be certified at the instance of either the holder or drawer.
Where a holder obtains the certification, the drawer and all prior
endorsers are discharged (Sec. 3-411(1), Uniform Commercial Code).
On the other hand, certification obtained by the drawer of the
check still leaves him or her liable in the event the certifying bank
should fail before the check is presented for payment.
A bank may certify a check before returning it for lack of proper
endorsement, but it does so, the drawer is discharged (Sec. 3-411(3),
Uniform Commercial Code).