Endorsing a check over from one company to another is possible by making a special endorsement on the back of the check. However, before making such an endorsement, verify with the company receiving the check that its bank will honor the special endorsement. Some banks reserve the right to return checks with special endorsements unpaid or may require you to appear at the bank to verify your endorsement on the check.
Check Endorsement Basics
Before a bank will accept a check for deposit or cashing, the back of the check must contain the endorsement of the payee -- that is, the person or company whose name appears on the front of the check after the words "Pay to the order of...." The most commonly used endorsement is called a blank endorsement, which consists of the payee’s signature on the back of the check in the same way it is printed or written on the front -- including any misspellings. Underneath the misspelled endorsement, the payee should sign his name correctly. A check with a blank endorsement is ready for deposit or cashing.
A potential problem with a blank endorsement on a check is that it can be cashed or deposited by anyone who obtains possession of the check -- even if the check is lost or stolen. If you intend to endorse a check over to another company, this problem can be avoided by making a special endorsement on the check. To make a special endorsement, print the words "Pay to the order of" on the back of the check and insert the name of the company that will be receiving the check. Underneath the company name, endorse the check in the same way you would make a blank endorsement. At this point, depositing or cashing the check is limited to the company whose name you wrote on the back of the check.
Checks bearing a special endorsement are also referred to as third-party checks. Typical situations in which a third-party check is acceptable concern payroll checks and insurance settlement checks. For example, if you cash your payroll check at a supermarket, you create a third-party check when you endorse it over to the supermarket. When an insurance company sends a check to you for damage to your car, you create a third-party check when you sign the check over to the repair shop that fixed your car.
Depositing Bank Policy
Banks specify their own policies on handling checks for deposit or cashing, particularly with respect to checks containing multiple endorsements. Such policies typically include the bank reserving the right to return as unpaid any deposited checks with multiple endorsements. If you sign over a check to another company with a special endorsement, the bank used by the company may also require you to personally come to the bank and verify your endorsement before accepting the check for deposit. To avoid difficulties like these, it is advisable to contact the bank regarding its polices before attempting to transfer the check by special endorsement.
- Money Services Business: Endorsements
- SunTrust Bank: Rules and Regulations for Deposit Accounts
- Huntington Bank. "How to Endorse a Check: What It Means to Endorse a Check." Accessed Jan. 10, 2020.
- BalanceTrack. "Checking Account Management," Chapter 2. Deposits. Accessed Jan. 10, 2020.
- Consumer Financial Protection Bureau. "I Lost a Check Written to Me. Someone Forged My Signature on the Back of the Check and Then Cashed It. What Can I Do?" Accessed Jan. 10, 2020.
- Huntington Bank. "How to Sign/Endorse a Check Over to Someone Else," Accessed Jan. 10, 2020.
- Members 1st Credit Union. "New Remote Check Deposit Endorsement Requirements." Accessed Jan. 10, 2020
Joe Stone is a freelance writer in California who has been writing professionally since 2005. His articles have been published on LIVESTRONG.COM, SFgate.com and Chron.com. He also has experience in background investigations and spent almost two decades in legal practice. Stone received his law degree from Southwestern University School of Law and a Bachelor of Arts in philosophy from California State University, Los Angeles.