Can You Sign Over A Business Check to Someone Else?

Can you deposit someone else’s check in your account?

Yes, if someone else’s check has been endorsed to you properly, you can deposit it in your account with little trouble. 

This type of check, known as a third-party check, contains the signature of the original recipient of the check as well as instructions saying that the check can now be cashed or deposited by you, the third-party recipient. 

You can verify this by checking the back of the check which will have the original recipient’s signature and the words “Pay to the order of (your first and last name)” under it. 

These instructions tell the bank where you’re depositing or cashing the check that you have been given ownership of the check to receive the payable amount on it. Some banks may require you to also sign your name under the original recipient’s signature to confirm your rights to the check. 

A third-party check can be processed by most banks but it’s important to keep in mind here that banks are not legally required to honor the instructions of a third-party check. They may consider third-party checks red flags because they cannot verify that the check was endorsed to you by the original recipient and not stolen from him or her.

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What credit score do you need to get a secured card? 

Several factors influence your credit score, but typically, customers must have a credit score of at least 500 to be approved for their first secured card. When looking for a new account, it’s critical to take into account all of this information.Using a secured card can help you improve your credit score. Whether you have good, bad, or no credit, opening a new account is the best way to begin rebuilding your financial history and increasing your overall score. A secured card will give you more borrowing flexibility, but only borrow what you know you’ll be able to repay in full and on time.

Where do you sign a check?

Someone writing a check will sign on the designated signature line at the bottom right-hand side of the front of the check. If you've received a check and you want to sign it over to someone else, then you sign on the back of the check in the section designated for endorsements.

What problems might I encounter in signing over a check?

As you begin the process of signing over a check, watch for potential roadblocks. One of the most significant issues could start with your recipient’s bank or credit union. Not all institutions will accept a signed-over check, and those that do may have specific guidelines.

And some banks won’t allow you to deposit a signed-over check via mobile check deposit, so you should make sure your recipient has easy access to a brick-and-mortar branch.

Warnings

  • Third-party checks can be a target for various types of scams, so only become a party in a third-party check signing with someone you know and trust.

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Why Would You Want to Sign a Check Over?

This process can seem a little complicated and intimidating, so why would you want to do this in the first place? What are the reasons for signing over a check?

There are several purposes for why you might choose to do this. You might need to pay someone for something or don’t have access to a bank account, for example.

To Pay Someone Money You Owe Them

Maybe you owe someone some cash. In that case, you can sign a check over to them in order to pay them back.

They can simply cash the check or deposit it into their own bank account, saving you from needing to handle this yourself.

You Don’t Have a Bank Account

If you don’t have an account in your name, you may find it challenging to pay people. If you owe someone some money or need to pay them for something, you can write a check over to them. That way, they can deposit or cash it without you needing to have your own account.

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Alternative Ways to Deposit a Check

If you or someone else needs to deposit a check, but you are having trouble getting to a branch, there are other hassle-free ways to solve this problem.

Many banks and credit unions offer mobile check deposits, and you can encourage your friend or family member to use this and then transfer the money directly to you once it is processed. If the financial institution does not offer mobile deposit, check and see if they offer ATM deposit.

In addition, many credit unions participate in shared branching that allows members to conduct business at other credit union locations.

What are Alternatives to Signing Over a Check?

Signing over a check is a relatively simple process usually. It only takes a couple of minutes, and you’re done. But what if you’d rather not get involved in the details of how to sign a check over to someone else? Are there other ways?

Open a Checking Account

Not having a checking account can be one of the reasons that people decide to sign a check over to another person. But if you have a checking account, you can write checks to others in their name, and you can also deposit checks into your account.

Setting up a checking account isn’t difficult, and it’s something that every adult should have for simplicity with finance. Do some research about banks and find one that you would like to work with.

After you do this, you can set up an account online or if your bank has a branch near you, you might choose to have a meeting to set up the account. Either way works, depending on what the bank offers and what you prefer. 

PNC

PNC bank offers an entirely online process, and they have an app. They offer cash rewards for opening various accounts, and their high yield savings account is also a great way to build up more cash. Because of this, they’re a great bank to get started with.

Chime

Chime is a good bank for beginners. They don’t have overdraft fees for up to $200.00, and there are no monthly fees with this bank. Not having overdraft fees is a big bonus for first-time account holders, because it gives you some room to learn. They also offer ways to help build your credit, online banking, and .50% APY.

Lending Club

Lending Club offers a $0 monthly fee, which is excellent for first-time checking accounts. There’s also a 1% cashback offer even with a debit card. And .10% APY with accounts of more than $2500.00.

Ask the Person the Check Originated From to Write a New Check Directly to the Third Party 

Rather than messing with all the extra steps needed to sign over the check, ask the person who gave you the check if they could write a new one to the recipient.

This saves you from needing to be involved. They may be willing to do this if you explain the situation but be prepared for them to say no, in which case you’d just sign over the check yourself.

Use a Check Cashing Service

This service will give you the chance to cash your check without needing to use a bank. They’ll take your check and give you the cash, but keep in mind there’s a fee for this service.

This means you’ll lose a bit of your check money. If you’re okay with that, then this can be a good way to go.

Don’t Try to Deposit Through an ATM

When you sign a check over to someone else, make sure they don’t try to deposit it through an ATM because you can’t guarantee that it’ll clear.

Many ATMs these days can handle check deposits, but these systems are highly automated.

They’re good at handling standard check transactions, but a check that’s been signed over is anything but standard.

The person to who you’ve signed the check may be able to deposit it at an ATM, but it’s best not to risk it.

Make sure they visit a bank and speak to a teller to maximize the chances of making this unusual type of transaction will complete.

How to endorse a check over to someone else

To give ownership of a check to someone else, sign the back of the check. Write ‘Pay to the order of’ and the new Payee’s name. Signing the back of the check allows anyone to cash or deposit the check. Therefore, ensure you write the new Payee’s name on the check to prevent someone else from cashing.

Here’s a video from Helpful DIY, which shows you the exact process of endorsing a check.

In the video, the original check was made out to John Smith for one thousand dollars. John Smith wants to give this check to Anthony Rich.

John Smith flips the check over, so he can write on the back of the check. On the back, John writes, ‘Pay to the order of Anthony Rich’ and then John also writes his signature.

Anthony Rich is now the official owner of the check. All John has left to do is give the check to Anthony.

5. Deliver the check to the endorsed individual or organization

Once they have the check in hand, it’s ready to be deposited. All you have to do is wait for it to clear.

Watch Out for Check-Cashing Scams

Whenever you’re working with checks you should be on the lookout for check cashing scams.

Remember that when you endorse a check prior to depositing it, you’re also taking some responsibility for the check’s legitimacy.

If you deposit a check that is later returned to the bank unpaid, you may be charged a returned item fee.

Also, recall that it takes a while for a bank to fully process a check. In fact, it can take a week or more before the bank receives the money from the issuing bank.

However, you get full access to the funds from the check-in much less time than that.

If you withdraw money from your account, and the bank later finds that one of the checks you deposited cannot be paid by the issuing bank, your bank will deduct that amount from your account.

If that deduction sends your checking account balance negative, you’ll wind up owing the bank money.

Notorious scams

A common scam is for someone to approach you asking you to cash a check on their behalf. They might ask you to cash a $1,000 check and give them $950. You get to keep the extra $50 for your trouble.

If you go through with this, you’ll later find that the check bounced. The $1,000 will be deducted from your account. The scammer will have effectively stolen $950 from your checking account with this scam.

When depositing a check make sure you trust the person who wrote it or is signing it over to you. If the check bounces you could be left on the hook.

2. Make sure the recipient and their bank will accept an endorsed check

There are some cases when an individual or businesses cannot accept an endorsed-over check. Sometimes policies prevent it, so it’s important to confirm this before signing over a check.

Step 4: Hand Over Your Check

It’s time to hand over the payment to your recipient! When you’re meeting up with your recipient, exchange contacts if you haven’t already. If any mishaps were to happen, like the bank not accepting the payment, they’ll be able to contact you.

If you get worried, touch base with your recipient to ensure the check went through. If you or anyone else in the exchange feels uneasy, opt for a more secure alternative. For instance, certified checks are authorized by banks for a more secure payment method and may be a better payment alternative, especially for large purchases.

How To Sign Over a Check

Before anything else, verify that both the receiving bank and the issuing bank accept signed-over checks. If they do, read on.

To sign a check over to someone else, you should first endorse it where you typically would, then write “Pay to the order of (the person’s name who you want to sign it over to)” on the next line.

You may also need the person you are signing the check over to to sign the check.

These things indicate that you signed over the check to the other person, allowing them to cash or deposit it.

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Different Policies in Banks

As mentioned before, not all banks have the same policy regarding check endorsement. Although your bank may tell you that you can indeed endorse a check to someone, that doesn’t mean that the recipient’s bank will allow them to cash it. That is why it’s best to call both your and the recipient’s bank and make sure that they approve endorsing checks. Even better, talk to a bank employee in person and find all the information you need. 

Cashing at the ATMs 

No matter what the amount that you want your endorsed check to bear, there’s one thing you should never do. That is, of course, to cash it on an ATM machine. When you send the check to the payee, make sure to give them a call and remind them not to cash it on an ATM. Either that or add a memo to the letter.  The fact is that you can cash a check on an ATM. However, this option is only available for regular checks. Because everything is automated, and the ATM recognizes only the most common types of a check. And the endorsed check isn’t one of them.  But what can happen if you try to cash an endorsed check on an ATM? You’ll be able to insert the check in the ATM, select the option to cash it, and that’s about it. The ATM will either display an error, and you’ll have to call the bank to get the check back.  The other scenario is that it won’t clear. This can create additional problems on both ends. You’ll have to contact the bank to explain the situation, sign a bunch of papers, have the third party present, etc. And who would want to waste time on that? The best thing you can do is avoid cashing endorsed checks on ATM machines. Again, you can call the bank or talk to the bank’s employee in person and ask about your options when cashing out an endorsed check. In most cases, they’ll tell you that it’s feasible but will advise you to avoid it if possible.   Post navigation

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