diff --git a/cardano-cli/src/Cardano/CLI/EraBased/Run/Transaction.hs b/cardano-cli/src/Cardano/CLI/EraBased/Run/Transaction.hs
index c59ace374a..6fb0c46e26 100644
--- a/cardano-cli/src/Cardano/CLI/EraBased/Run/Transaction.hs
+++ b/cardano-cli/src/Cardano/CLI/EraBased/Run/Transaction.hs
@@ -56,7 +56,7 @@ import           Cardano.CLI.Types.TxFeature
 import qualified Ouroboros.Network.Protocol.LocalStateQuery.Type as Consensus
 import qualified Ouroboros.Network.Protocol.LocalTxSubmission.Client as Net.Tx
 
-import           Control.Monad (forM)
+import           Control.Monad (forM, when)
 import           Data.Aeson ((.=))
 import qualified Data.Aeson as Aeson
 import           Data.Aeson.Encode.Pretty (encodePretty)
@@ -80,6 +80,7 @@ import           Data.Type.Equality (TestEquality (..))
 import           GHC.Exts (IsList (..))
 import           Lens.Micro ((^.))
 import qualified System.IO as IO
+import Control.Exception (throwIO)
 
 runTransactionCmds :: Cmd.TransactionCmds era -> ExceptT TxCmdError IO ()
 runTransactionCmds = \case
@@ -198,6 +199,38 @@ runTransactionBuildCmd
         first TxCmdProposalError
           <$> readTxGovernanceActions eon proposalFiles
 
+  -- Extract return addresses from proposals and check that the return address in each proposal is registered
+
+    let returnAddrHashes = Set.fromList --queryStakeAddresses used bellow takes a Set of StakeCredential 
+          [ StakeCredentialByKey returnAddrHash
+          | (proposal, _) <- proposals
+          , let (_, returnAddrHash, _) = fromProposalProcedure eon proposal -- fromProposalProcedure needs to be adjusted so that it works with script hashes. 
+          ]
+    
+    let treasuryWithdrawalAddresses = Set.fromList
+          [ stakeCred
+          | (proposal, _) <- proposals
+          , let (_, _, govAction) = fromProposalProcedure eon proposal
+          , TreasuryWithdrawal withdrawalsList _ <- [govAction]  -- Match on TreasuryWithdrawal action
+          , (_, stakeCred, _) <- withdrawalsList  -- Extract each stake credential in treasury withdrawals
+          ]
+
+    let allAddrHashes = Set.union returnAddrHashes treasuryWithdrawalAddresses
+
+    queryResult <- liftIO $ executeLocalStateQueryExpr localNodeConnInfo Consensus.VolatileTip $
+      queryStakeAddresses eon allAddrHashes networkId
+    
+    let unregisteredAddresses = case queryResult of
+          Right (Right (Right (balances, _))) ->
+            filter (\stakeCred -> not (Map.member (makeStakeAddress networkId stakeCred) balances)) (Set.toList allAddrHashes)
+          _ -> Set.toList allAddrHashes -- If query failed, add to the unregistered addresses list. 
+
+    -- WIP: This is a temporary solution to handle error message.
+    when (not (null unregisteredAddresses)) $ liftIO $ do
+      let errMsg = "Error: One or more stake addresses in proposals is not registered: " ++ show unregisteredAddresses
+      IO.hPutStrLn IO.stderr errMsg
+      throwIO $ userError errMsg 
+
     -- the same collateral input can be used for several plutus scripts
     let filteredTxinsc = nubOrd txinsc