How to Sign Over a Check: An Example

When a check is received, funds are typically intended for the individual or entity named as the payee. However, the original payee may wish to transfer these funds to another person. This process, known as “signing over a check,” allows the original recipient to endorse the check, transferring its ownership to a third party. This transaction requires specific steps to ensure its legality and acceptance by financial institutions.

Basics of Check Endorsement

Endorsement refers to signing the back of a check by the payee to authorize its cashing, deposit, or transfer. The original person or entity to whom the check is written is the payee; once they sign, they become the endorser. A “third-party endorsement,” also known as a “special endorsement,” is the method used when the payee transfers the check’s ownership to someone else.

Individuals might sign over a check for practical reasons, such as paying a debt or as a gift. For example, if someone receives a refund check but owes a friend money, they could sign it over to the friend instead of depositing it and making a separate payment. This offers a convenient way to transfer funds without multiple transactions.

Step-by-Step Check Endorsement

The process of signing over a check involves precise steps the original payee must follow on the back of the check. First, locate the endorsement area, which is typically found on the left side of the back of the check. The original payee must sign their name precisely as it appears on the “Pay to the Order of” line on the front of the check. Any discrepancies in the signature could lead to the financial institution rejecting the check.

Immediately below their signature, the original payee must clearly write “Pay to the Order of [New Payee’s Full Name].” The new payee’s full legal name must be written legibly to avoid confusion or processing delays. For example, if John Doe signs a check over to Jane Smith, the back would show John Doe’s signature, followed by “Pay to the Order of Jane Smith” written directly underneath.

Maintaining clear and legible handwriting throughout this endorsement process is important. Illegible writing can cause issues for the financial institution processing the check, potentially leading to its rejection. Clear endorsement ensures a smooth transfer of funds to the intended new recipient.

Key Considerations for Check Endorsement

Not all checks are eligible to be signed over to a third party, and certain limitations exist that individuals should be aware of. Checks explicitly marked with phrases like “For Deposit Only” or “Non-negotiable” generally cannot be signed over. Some government-issued checks, such as tax refunds, Social Security payments, or certain insurance settlement checks, may also have restrictions preventing third-party endorsements due to specific regulations.

Financial institutions have varying policies regarding third-party endorsed checks. Some banks may not accept them, especially for substantial amounts or if multiple endorsements exist. The new payee should contact their bank beforehand to confirm their policy and inquire about specific requirements. This proactive step can prevent inconvenience or delays.

After the original payee endorses the check to the new recipient, the new payee must also endorse it before cashing or depositing it. This involves the new payee signing their name below previous endorsements. For larger amounts, the bank receiving the check might require verification of the original endorser’s identity, potentially involving contacting them.