How do you endorse a third-party check?
Credit: Betsssssy CC-BY 2.0
Q:

How do you endorse a third-party check?

A:

Quick Answer

A third-party check is endorsed with the signature of both the second and third parties. The second party writes instructions on the check in regards to whom is the third party. The second party signs after these instructions. The third party signs the check and can include further instructions. All endorsements must fit within the endorsement field on the check.

  Know More

Full Answer

The second party includes instructions by writing the words "Pay to the order of" followed by the third party's name. The third party can also include that phrase followed by his bank account information, or he can include any instructions. "For deposit only" is a common instruction to prevent anyone else from cashing the check if it is stolen.

The second party should verify the policy of the check issuer, because some do not allow third-party endorsements. The third party should check with his bank to ensure the bank accepts the check. Third-party endorsements are considered high risk because of the possibility of a forgery. While third-party endorsement is legal, banks choose to accept or reject the checks at their own discretion. The bank may also put the funds on hold for a certain period of time as a precaution. As an alternative option, the second party can cash the check and pay the third party directly.

Learn more about Personal Banking

Related Questions

  • Q:

    Which banks accept third-party checks?

    A:

    Most banks accept third-party checks for deposit under certain circumstances but can reject them at the discretion of bank management. Banks typically will not accept third-party checks unless the payee has an account at the bank with a balance sufficient to cover the check's value. If the bank accepts the check, it may place a hold on the check until it has cleared.

    Full Answer >
    Filed Under:
  • Q:

    Where can you cash a two-party check?

    A:

    A two-party check is cashed at the bank where it's from or at check-cashing stores. A two-party check is written to two individuals.

    Full Answer >
    Filed Under:
  • Q:

    How do you make a water utility payment online?

    A:

    Most banks provide an online payment system for their clients to make utility payments and transfer funds to third parties. To pay your water bill in New York City, register for a DEP account, save your payment information and authorize your bank to pay the amount due.

    Full Answer >
    Filed Under:
  • Q:

    What is a Medallion Signature Guarantee?

    A:

    A Medallion Signature Guarantee is a certification stamp issued by a financial institution required when the owner of securities in physical form wants to sell or exchange them. Banks, credit unions and brokers can guarantee a signature as a safeguard from fraudulent activity and sometimes charge a small fee for the service, according to the United States Securities and Exchange Commission.

    Full Answer >
    Filed Under:

Explore