Do I Need to Endorse a Cashier’s Check?

Cashier’s checks differ from personal checks, influencing when and how an endorsement is required. Understanding these differences and proper endorsement methods helps ensure funds are handled securely.

Understanding Cashier’s Checks

A cashier’s check is a payment instrument issued and guaranteed by a bank or credit union, not directly by an individual’s account. The bank withdraws the specified amount from the payer’s account or receives cash upfront, then issues a check drawn on its own funds. This makes cashier’s checks a secure form of payment, as the bank guarantees the funds, reducing the risk of bouncing. Unlike a personal check, which relies on the account holder having sufficient funds, a cashier’s check’s validity is backed by the issuing financial institution. They are often required for large transactions, such as real estate closings or vehicle purchases.

Endorsing for Deposit or Cashing

When you receive a cashier’s check and intend to deposit it into your bank account or cash it, endorsement is typically required. The most common method is a “blank endorsement,” where you simply sign your name on the back of the check. This signature authorizes your bank to process the check and credit the funds to your account. A blank endorsement makes the check payable to anyone holding it, so it is generally safest to sign it just before you are about to deposit or cash it.

For enhanced security, especially if mailing a check or when depositing via mobile or ATM, a “restrictive endorsement” is advisable. This involves writing “For Deposit Only” above your signature on the back of the check. You can also add your account number to ensure the funds are deposited into a specific account. This type of endorsement restricts the check’s use, meaning it can only be deposited into the specified account, preventing it from being cashed by someone else if lost or stolen.

Endorsing for Transfer to Another Party

It is possible to endorse a cashier’s check to transfer its ownership to a third party, a process known as a “special endorsement” or “third-party endorsement.” This is accomplished by writing “Pay to the order of [Third Party’s Name]” followed by your own signature on the back of the check. This action legally transfers the right to receive the funds from you to the named third party. The third party then becomes the new payee and must endorse the check themselves before depositing or cashing it.

Not all banks are obligated to accept third-party checks due to potential fraud risks. Before attempting such a transfer, the new recipient should contact their bank to confirm their policy on accepting third-party endorsed checks. If the recipient’s bank does not accept it, the original payee may need to deposit the check into their own account first and then issue a new payment to the third party.

Addressing Endorsement Errors

If an error occurs during endorsement, such as a misspelled name on the check, there are steps to take to resolve the issue. If your name is misspelled as the payee, you should endorse the check by first writing the name exactly as it appears incorrectly on the check, and then writing your correct legal signature below it. For significant misspellings, it may be best to ask the issuer to void the check and issue a new one with the correct spelling.

If a cashier’s check is lost or stolen after being endorsed, especially with a blank endorsement, contact the issuing bank as soon as possible to report the loss. Since cashier’s checks are guaranteed funds, placing a stop payment is not as straightforward as with a personal check and often involves a waiting period, typically around 90 days. The bank will likely require you to complete a “declaration of loss” form and may require an indemnity bond to protect them if the original check is later presented for payment. This bond ensures that you, rather than the bank, would be liable if the lost check is improperly cashed.