How to Transfer a Check to Someone Else

Transferring a check made out to you to another person involves specific steps on the check itself. This process allows the funds to be directed from the original payee to a new recipient. Understanding the proper way to handle such a transfer is important for ensuring the transaction is completed smoothly and securely.

Understanding Check Endorsement

A check endorsement is the signature and any accompanying instructions placed on the back of a check by the payee. This action serves as authorization for the transfer of funds or to specify how the check should be handled, such as for deposit only. Most checks feature a dedicated area on the back, often marked “Endorse Here,” where this signature and additional notes should be placed.

Endorsement is a necessary step for processing checks. Without a proper endorsement, a financial institution may not accept the check for deposit or cashing. The type of endorsement chosen dictates the check’s negotiability and level of security.

Methods for Transferring a Check

There are specific methods for endorsing a check, each with distinct implications for its transferability and security. The choice of endorsement depends on whether the check is being deposited by the original payee or transferred to another individual.

Blank Endorsement

A blank endorsement involves only the payee’s signature on the back of the check. While simple, this method carries significant risk because it makes the check payable to anyone who possesses it. If a check with a blank endorsement is lost or stolen, anyone can cash or deposit it. Therefore, it is advisable to apply a blank endorsement only immediately before presenting the check to a bank teller or an ATM.

Special Endorsement

A special endorsement allows the original payee to transfer the check to a specific new recipient. To perform this, the original payee writes “Pay to the order of [New Payee’s Full Name]” on the back of the check, followed by their own signature. This directs the funds to the named new payee, who must then endorse the check themselves to cash or deposit it. This method is more secure than a blank endorsement, as it restricts who can receive the funds.

Restrictive Endorsement

A restrictive endorsement limits how a check can be used, typically for deposit only. To apply this, the payee writes “For Deposit Only” and often includes their account number, followed by their signature. While not used for transferring a check to another person for cashing, it ensures the funds can only be deposited into a specified account. This prevents the check from being cashed by anyone if it is lost or stolen. Some financial institutions may require additional wording, such as “For mobile deposit only,” for checks deposited via mobile banking applications.

Important Considerations When Transferring

Financial institutions have specific policies that can impact the success of such transactions. It is always wise to confirm the recipient’s bank policies regarding third-party checks before endorsing.

Many banks are cautious about accepting checks that have been endorsed to a third party due to the increased risk of fraud. Some banks may not accept them at all, or they might require both the original payee and the new recipient to be present with identification for the transaction. If a check is made out to multiple payees, the conjunction used (e.g., “and” versus “or”) determines if all parties must endorse the check or if only one is sufficient.

The original payee who endorses a check over to someone else may retain some liability if the check is later dishonored, such as due to insufficient funds. If the check bounces, the bank might seek repayment from the original endorser.

Fraudsters can exploit improperly endorsed checks, so it is advisable to endorse a check only when you are ready to deposit or transfer it. Using a special or restrictive endorsement provides a higher level of security by limiting who can cash or deposit the check.

Certain types of checks, such as government checks, insurance checks, or cashier’s checks, may have specific restrictions on transferability. Personal checks are valid for 180 days (six months) from their issue date, as per the Uniform Commercial Code (UCC), but some may have shorter void-after dates printed on them. It is best practice to deposit or cash checks promptly to avoid issues with stale checks or potential changes in the payer’s account.