§ 15-802. Dishonored checks or other instruments

   (a) Notice of dishonor. -- When a check or other instrument has been dishonored by nonacceptance or nonpayment and has not been paid within 10 days, the holder to whom the check or other instrument was issued or negotiated may send a notice of dishonor to the maker or drawer as provided under this section.

(b) Liability for dishonored check or instrument; fines and fees. -- If a check or other instrument has not been paid within 30 days after the holder has sent a notice of dishonor to the maker or drawer, the maker or drawer of a check or other instrument that has been dishonored shall be liable for:

   (1) The amount of the check or instrument;

   (2) A collection fee of up to $ 35; and

   (3) An amount up to 2 times the amount of the check, but not more than $ 1,000.

(c) Timing for damages sought; certificate of mailing. --

   (1) (i) The holder of a check or other instrument that has been dishonored may seek the damages provided under this section in the District Court of Maryland 30 days after a notice of dishonor has been sent by mail to the last known address of the maker or drawer.

      (ii) For each notice sent by the holder under subparagraph (i) of this paragraph, the holder shall:

         1. Obtain a certificate of mailing from the U. S. Postal Service; or

         2. Execute an affidavit that attests to the mailing of the notice in compliance with subparagraph (i) of this paragraph.

   (2) A notice of dishonor sent by a holder under this section to a maker or drawer of a dishonored check or other instrument shall substantially comply with the form prescribed in § 15-803 of this subtitle.

(d) When damages prohibited. -- A holder may not recover any damages under subsection (b)(3) of this section if:

   (1) The holder has demanded of, and received from, the maker or drawer:

      (i) Collection costs in excess of the collection fee provided under subsection (b)(2) of this section; or

      (ii) Collection costs within 30 days after the mailing of the notice of dishonor, under subsection (c) of this section; or

   (2) The dishonored check or other instrument provides for the payment of collection costs in the event of dishonor.

(e) Defenses. --

   (1) It shall be a complete defense to any action brought under this section by any holder of a dishonored check or other instrument that, within 30 days from the mailing of the notice of dishonor, the maker or drawer has paid to the holder the full amount of the check or other instrument and collection costs of not more than $ 35.

   (2) It shall be a complete defense to any action brought under this section by a holder to whom a dishonored check or other instrument was issued that the dishonor of the check or other instrument was due to a justifiable stop payment order or to the attachment of the account.

   (3) In any action brought under this section by a holder or holder in due course to whom a dishonored check or other instrument was negotiated, the action is subject to all valid defenses that may be raised by the maker or drawer against the holder or holder in due course under Title 3 of this article.

HISTORY: 1998, ch. 682; 1999, ch. 34, § 1; 2001, ch. 579; 2002, ch. 298; 2003, ch. 275.