How to Sign Over a Check to Someone Else for Deposit

Signing over a check allows the original recipient to transfer their right to the funds to another individual. This action, also known as a third-party endorsement, means the check can be deposited or cashed by the new payee. Understanding the process of signing over a check remains a practical skill for situations like paying someone directly or correcting a recipient error.

Understanding Check Eligibility for Transfer

Before signing over a check, it is important to understand which checks are eligible for transfer. A “third-party check” is a check made out to one person (the original payee) who then endorses it over to a third person. Many financial institutions have policies against accepting these checks or impose strict requirements due to the increased risk of fraud and the complexities involved in verifying multiple endorsements.

Banks face potential liabilities if a signed-over check is later found to be fraudulent or if there are disputes about the transfer. For instance, an incorrect endorsement can create legal and financial issues for the bank. Certain types of checks generally cannot be signed over, including government-issued checks like tax refunds or Social Security payments, as they are typically non-transferable. Money orders and some insurance checks also frequently have restrictions against third-party endorsements.

The Endorsement Process

Endorsing a check to transfer its ownership involves specific steps. The original payee must locate the endorsement area on the back of the check, usually indicated by a line or a box that says “Endorse Check Here.” They should sign their name exactly as it appears on the “Pay To” line on the front of the check. This initial signature signifies the original payee’s intent to transfer the funds.

Immediately below their signature, the original payee must write a special endorsement: “Pay to the order of [New Payee’s Name].” This explicitly directs the funds to the designated third party. Ensure legibility and avoid writing below any “do not write, stamp or sign below this line” area, as this could lead to the bank refusing the check.

Important Considerations and Deposit Steps

Signing over a check carries inherent risks for both the original payee and the new recipient. An endorsed check becomes similar to cash; if lost or stolen after endorsement, it could be cashed by anyone who finds it, as the endorsement makes it a bearer instrument. There is also a risk of the check bouncing if the original check writer does not have sufficient funds, which would make the recipient liable for the amount. To mitigate these risks, endorse the check only when ready to hand it over, ideally when physically present at the recipient’s bank. Taking a photo or copy of both sides for your records is also a prudent step.

The recipient must take specific actions at their bank. They will need to sign the check themselves, typically below the original payee’s endorsement. Banks usually require the recipient to present valid government-issued identification, such as a driver’s license, to verify their identity before processing the deposit. Banks retain the right to refuse third-party checks, even if properly endorsed, based on their internal policies or if they detect any irregularities. Therefore, the recipient should contact their bank in advance to confirm their policy on accepting third-party checks to avoid complications.