Proper Check Endorsements

Signing a check improperly for deposit can result in the check being returned.

The endorsement of a check signifies the legal transfer of funds from one party to another. Checks must be endorsed properly, otherwise the bank may not accept the transfer of funds, and a new check will need to be issued.

Payee

The payee of a check is found in the "Pay to the Order of" section of a check. If the payee is listed as an individual, that individual must endorse the check on the opposite side, accepting the payment. If the payee lists more than one person, all applicable parties must endorse the check in order for it to be valid.

Types

Check endorsements can be done in five different ways, depending on how the payee and the payer have negotiated the check. Checks can be conditional endorsements, restrictive endorsements, special endorsements, blank endorsements and qualified endorsements. The most common type of endorsement is a qualified endorsement, which is the signature of the payee on the opposite side of a check, accepting the payment.

Considerations

Depending on the type of endorsement used on a check, a bank can hold funds for up to a week to validate the payment and the terms of the check as well as the endorsement. This will be per the specific bank's terms of deposit, which are disclosed to a consumer when opening an account.

References

• Bankers Online: Check Endorsements
• Money Services Business: Endorsements
• Princeton: Definition of Endorsement