How to Sign Over a Check to Another Person
Learn the precise process for assigning a check to another person. This guide covers the critical details and necessary precautions for a valid transfer.
Signing over a check, also known as a third-party endorsement, transfers the right to cash or deposit a check from its original recipient to another individual or entity. This method allows the initial payee to reassign payment directly to someone else without first cashing or depositing the check.
Understanding Check Endorsements
An endorsement is a signature on the back of a check that allows it to be cashed or deposited. Different types of endorsements exist, each with varying implications for the check’s negotiability and security.
A blank endorsement is the simplest form, where the payee signs their name exactly as it appears on the front of the check. Once blank-endorsed, the check becomes a bearer instrument, meaning anyone in possession of it can cash or deposit it, making it the riskiest type of endorsement due to potential fraud if lost or stolen.
A special endorsement, also known as a third-party endorsement, is the method used to sign over a check to another person. This involves the original payee writing “Pay to the order of [New Payee’s Name]” followed by their own signature. This endorsement restricts the check’s negotiation to the named new payee.
A restrictive endorsement limits how a check can be used, such as “For Deposit Only” or “For Deposit Only to Account #[Account Number]”. While adding a layer of security by ensuring funds are deposited into a specific account, this type of endorsement is not for signing over a check.
Steps to Sign Over a Check
Signing over a check requires precise actions by the original payee to ensure the transfer is valid.
Begin by locating the endorsement area on the back of the check, which is typically on the left side and often marked with a line or box that says “Endorse Here”. This designated space is where all endorsement details should be clearly written.
Next, write the special endorsement phrase “Pay to the order of [Recipient’s Full Name]”. Use the recipient’s full legal name to avoid issues with their bank.
Immediately below this phrase, the original payee must sign their name exactly as it appears on the “Pay to the order of” line on the front of the check. Sign the check only when it is ready to be handed over to the recipient to minimize security risks.
Recipient Actions and Important Considerations
After a check has been signed over, the new recipient has specific responsibilities and should be aware of important practical considerations.
The new recipient must endorse the check themselves by signing their name below the original payee’s signature. This secondary endorsement is required before attempting to cash or deposit the check.
Not all banks accept third-party checks, or they may have specific requirements for processing them. Some financial institutions may require both the original payee and the new recipient to be present, or they might only allow the check to be deposited into an account held by the recipient. It is advisable for the recipient to contact their bank beforehand to confirm their policies on third-party checks.
For security, the check should only be signed over when it is immediately being transferred to the recipient. An endorsed check that is not promptly handled carries a risk of loss or theft, as it could potentially be cashed by an unauthorized individual. Clear handwriting and accurate names are essential for all endorsements to prevent processing delays or rejection by the bank.