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Can you summarize IACO 554.12502?
UNIFORM COMMERCIAL CODE > Creditor process served on receiving bank setoff by beneficiarys bank.
Short Summary
This section of the Iowa Code, specifically under the Uniform Commercial Code, governs the process of creditor process served on a receiving bank and the setoff by the beneficiary’s bank. The section defines ‘creditor process’ as various legal processes issued by or on behalf of a creditor or claimant with respect to an account. If the creditor process is served on the receiving bank and the bank accepts the payment order, the balance in the authorized account is deemed to be reduced by the amount of the payment order, unless the bank had a reasonable opportunity to act on the creditor process before accepting the payment order. Additionally, if a beneficiary’s bank receives a payment order for payment to the beneficiary’s account, the bank may credit the account and set off the amount against an obligation owed by the beneficiary or apply it to satisfy a creditor process served on the bank. The beneficiary’s bank may also allow withdrawal of the credited amount unless a creditor process is served in a timely manner to prevent withdrawal. However, if the beneficiary’s bank had a reasonable opportunity to act on a served creditor process, it may not reject the payment order except for reasons unrelated to the service of process. The section also clarifies that creditor process with respect to a payment by the originator to the beneficiary can only be served on the beneficiary’s bank, and other banks are not required to act on the process.
Whom does it apply to?
Receiving banks, beneficiary's banks, creditors, claimants
What does it govern?
Creditor process served on receiving bank setoff by beneficiarys bank
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
No penalties are mentioned.
Jurisdiction
Iowa