When to Endorse a Check and How to Do It

A check endorsement is a signature on the back of a check, necessary to validate or transfer its ownership. It authorizes the bank to convert the check into cash or deposit funds into an account. This step confirms the payee’s approval to receive or transfer the money.

Types of Check Endorsements

There are three primary types of check endorsements, each with distinct implications for the check’s use and security. The designated endorsement area is typically found on the back of the check, often with a line or box labeled “Endorse Here.”

A blank endorsement is the simplest and most common type, involving only the payee’s signature on the back of the check. This method carries the highest risk because it makes the check payable to anyone who possesses it. If a blank-endorsed check is lost or stolen, it can be cashed or deposited by an unauthorized individual. Therefore, it is recommended to use a blank endorsement only immediately before depositing or cashing the check.

A special endorsement, also known as a full endorsement, allows the original payee to transfer the check to another specific person or entity. The original payee writes “Pay to the order of [New Payee Name]” and then signs their own name below it. This transfers ownership of the check to the new payee, who must then also endorse the check.

A restrictive endorsement limits how the check can be used, offering a higher level of security. The most common form involves writing “For Deposit Only” followed by the payee’s signature. This ensures the check can only be deposited into the specified account.

When Endorsement is Necessary

Endorsement is a routine requirement in several common financial scenarios, authorizing the bank to process the funds. The endorsement area on the back of the check usually includes instructions like “Endorse Here.” Using permanent ink, such as blue or black, is advisable for all endorsements.

Depositing a Check

When depositing a check into your own account, a signature is generally required. This typically involves a blank endorsement, or a restrictive endorsement for added security, directing the funds to your account.

Cashing a Check

Cashing a check also necessitates an endorsement by the payee. The signature on the back of the check allows the bank or cashing institution to verify the payee’s identity and process the cash transaction.

Signing Over a Check (Third-Party Endorsement)

Signing over a check to another party, also known as a third-party endorsement, involves transferring the check’s ownership from the original payee to someone else. This requires a special endorsement, where the original payee writes “Pay to the order of [New Payee Name]” and then signs the check. Not all banks accept third-party checks, so the new recipient should confirm with their bank before attempting to cash or deposit it.

Special Endorsement Situations

Specific circumstances can alter the standard endorsement process. These situations often involve additional instructions to ensure proper processing.

Mobile Deposits

Mobile deposits often have unique endorsement requirements. Banks often require that, in addition to a signature, the phrase “For Mobile Deposit Only” be written on the back of the check. Some institutions may also require the bank’s name or the account number to be included. Failure to include these specific phrases may result in the check being rejected, even if the mobile app has a checkbox for mobile deposits.

Checks with Multiple Payees

Checks made out to multiple payees require careful consideration of how names are connected. If the word “and” appears between the payees’ names (e.g., “John AND Jane Smith”), all listed payees must endorse the check. Conversely, if the word “or” is used (e.g., “John OR Jane Smith”), only one of the named individuals is typically required to endorse it. Banks may have specific policies regarding identification verification for all parties, especially for checks with higher dollar amounts or when depositing into an account that does not list all payees.

Business Checks

Endorsing business checks follows a specific protocol, as the check is made payable to an entity rather than an individual. An authorized representative of the business must endorse the check. This typically involves writing the business name exactly as it appears on the payee line, followed by the representative’s signature and their title, such as “Owner” or “Accountant.” Adding a restrictive endorsement like “For Deposit Only” is a common practice to enhance security for business deposits.