by Bob Schmidt

Created on: September 12, 2009   Last Updated: September 14, 2010

Endorsing a check to someone else is not difficult, but it must be done carefully to avoid problems when presented to a bank. Since banks are liable for the proper transfer of funds involved, they require all customers to follow the rules of proper endorsement.

Before endorsing any check, it should be examined carefully in order to be sure that the amount of money involved is correctly noted. Any discrepancy between the numerical representation of the funds from the written out amount will result in the  bank rejecting the check.

Once one is satisfied that the check has been properly written, the actual endorsement and assignment of the funds to someone else will occur on the back of the check. The following procedure should be used.

Proper endorsement~

The back of the check has an area designated as the place for endorsement. Your signature should be placed upon the first line, and should match the payee name noted on the front of the check. Any confusion about the signature might cause the bank to refuse the check.

Immediately under your endorsement (signature), the notation "Pay to the order of............" should be written. The person to whom the check has been assigned should be named. This will assure that if the check were lost, someone else could not cash it. An endorsed check without notation of assignment to someone else is the same as cash.  . Never endorse a check until it is to be exchanged for money, or given to a third party.

Assistance with endorsement questions~

Every bank has personnel who can fully explain their policies regarding proper check endorsement. Since banks do not charge for information, it is wise to ask for assistance with any question regarding checks and checking accounts. They will also assist those who call via telephone with questions.

A note of caution~

Since the direct endorsement of a check to a third party involves a payment of money, be sure to get a receipt or make a copy that provides proof of payment to that party. Whoever wrote that check to you is not obligated to help you with copies of old checks later on if the person you assigned the check to fails to acknowledge the receipt of that money. Some form of receipt should be kept to prove payment, just in case.

Summary~

Even though checks may be endorsed in favor of third parties, it might not be the best banking practice to use for payment of funds. In instances where it is done, always get a receipt that notes the money exchanged. This will protect from the unknown future, always a good thing to do when money is involved.

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