Who Should Endorse the Back of a Check?

Endorsing a check involves signing the back to authorize its processing, whether for deposit or cashing. This action serves a fundamental purpose by transferring ownership of the funds or providing specific instructions for handling the check. Proper endorsement is a security measure that helps banks verify the intended recipient and ensures accurate transactions. Without a valid endorsement, banks often lack the necessary authorization to process the check.

Identifying the Proper Endorser

The individual or entity to whom a check is made out, known as the payee, is generally the only party authorized to endorse it. This endorsement signifies the payee’s approval for the transfer of funds. However, someone other than the named payee can legally endorse a check on their behalf in certain situations.

An authorized agent, such as an individual holding power of attorney (POA), may endorse a check for the payee. The endorsement should state the payee’s name, followed by the agent’s name and capacity, for example, “Payee Name by Agent Name, POA.” For checks issued to a business, an authorized representative like an officer or manager must endorse on the company’s behalf. This involves the business name as it appears on the check, then the representative’s signature and title, such as “Business Name, Your Name, Title.”

When a check is made out to a minor, a parent or legal guardian endorses it. The endorsement should include the minor’s name followed by “minor,” and then the parent’s or guardian’s name and their relationship, such as “Minor’s Name – minor, Parent’s Name – parent.”

Understanding Endorsement Types

Different endorsement methods affect a check’s negotiability and security. The blank endorsement is the simplest, involving only the payee’s signature on the back. While convenient for immediate deposit or cashing, a blank endorsement converts the check into a “bearer instrument.” This means anyone possessing it can cash or deposit it, posing a security risk if lost or stolen.

A special endorsement transfers the check to a specific new person or entity. This is done by writing “Pay to the order of [New Payee Name]” followed by the original payee’s signature. This method creates a clear chain of ownership and offers more security than a blank endorsement. However, banks may require the original payee to be present with identification if the new payee attempts to cash it.

The most secure type is a restrictive endorsement, which limits the check’s use. Common examples include writing “For Deposit Only” or “For Deposit Only to account # [account number]” above the signature. This ensures the check can only be deposited into a specified account, preventing it from being cashed or negotiated if lost or stolen. Some banks may also require “For Mobile Deposit Only” for checks deposited via mobile app.

Addressing Specific Endorsement Situations

For checks made out to multiple payees, the conjunction between their names determines the endorsement requirement. If the check states “Payee A AND Payee B,” both individuals must endorse it. If it reads “Payee A OR Payee B,” either individual can endorse the check independently.

Checks issued to deceased payees require endorsement by the executor or administrator of the deceased’s estate. Banks may require specific legal documentation, such as letters testamentary, to verify the endorser’s authority. Minor endorsement errors, like a misspelling of the payee’s name, can sometimes be corrected by endorsing with the misspelled name first, then the correct spelling below it. However, significant errors may require contacting the check writer for a new check to avoid delays or rejection.

Endorsing a check over to a third party is possible but often discouraged by banks due to fraud risks. Many financial institutions may refuse “third-party checks” or require both the original payee and the new recipient to be present with identification. Before attempting a third-party endorsement, the new recipient should confirm their bank’s policy, as some banks do not accept these transactions.