The payee named on a check endorses the check on the back by writing his or her name exactly as it appears on the front of the check. Signing the back of the check completes negotiation of the item allowing the transfer of money ordered by the check.

If more than one person is listed on the check as a Payee, then the requirements for endorsement depend on how the names are written. If the check indicates John Doe AND Jane Doe, then each must sign the check. If the check indicates John Doe OR Jane Doe, then only one signature is required. If the two names are listed and the words “and” or “or” are not shown, assume “and”.

Correctly endorsing a check makes it negotiable.

There are five (5) types of endorsements with which a check casher should be familiar. The majority of check cashers will only accept “blank” endorsements. It is the most common and least risky type of endorsement.

Conditional Endorsement

A “conditional” endorsement is one of the ways in which a check may be endorsed.

This type of endorsement places a limit or restriction upon the time when a check can be paid. For example, Larry Smith has written a check payable to John Doe. John Doe conditionally endorses the check as “Payable to Billy Cooper upon satisfactory completion of drywall job, (signed) John Doe.”

For this item, a condition must be met in order for the check to be negotiated further, i.e. Billy Cooper must have satisfactorily completed the drywall job. A check casher would most likely want to avoid taking this item. The potential risks for this item include:

  • bad Maker
  • Maker has insufficient funds
  • Endorsement by John Doe was forged
  • Condition not met

If the condition was not met, the check casher would have liability to John Doe.

Banks do not typically cash such items and will only accept them for deposit into an account where the bank has recourse.

Restrictive Endorsement

A restrictive endorsement restricts or limits negotiability.

“For deposit only” is the most common form of restrictive endorsement and is used to prevent further negotiation of the check. For example, a check payable to John Doe signed by John Doe, i.e. a “blank” endorsement, can be cashed or deposited by anyone holding the item in the event that it is lost or stolen. A “blank” endorsement makes the item like cash.

By placing “For deposit only” after the blank endorsement, further negotiation of the item is restricted. One of the ways in which check cashers minimize their risk of loss is by placing their own restrictive endorsement on cashed checks after the payee has endorsed the item.

It is unlikely that there would be a reason for a check casher to accept any check with a restrictive endorsement for cashing.

Special Endorsement

A “special” endorsement allows a payee to make a check payable to another person or entity.

For example, if John Doe, the payee, wants to make the check payable to his wife, Susan Doe, he would write “Pay to the order of Susan Doe,” on the back of the check and then endorse it.

A check casher shouldn’t normally cash such an item unless the payee is present and identified.

For example, how do you know that the special endorsement is legitimate? What if the Does are in the process of obtaining a divorce? The endorsement of John could potentially be a forgery. You could take a loss and then be forced into seeking restitution from Susan.

Blank Endorsement

In order for a check to be cashed or further negotiated, it must be properly endorsed. A “blank” endorsement is the most common type of check endorsement.

With a blank endorsement, the payee (person to whom the check is made payable) signs his/her name as it appears on the face of the check. If the person’s name is misspelled on the face of the check, the person endorses exactly as the name is misspelled and then signs again with the correct spelling.

If there are more than one payee is identified on the check, the form of a blank endorsement depends on how the payees are listed. If the check is payable to A and B, then both A and B must endorse the check. If the check is payable to A OR B, then either A or B must endorse the check.

A blank endorsement is the most common type of endorsement and is the least restrictive in that it does not limit negotiability. Any other person can further negotiate a check with a blank endorsement.

Prior to cashing a check, the check casher should confirm the identity of the person presenting the check, verify that person is the named payee, then obtain a blank endorsement

Qualified Endorsement

A qualified endorsement limits the responsibility of the endorser.

With a qualified endorsement, the endorser will not assume any responsibility for paying the check if it is returned for any reason. The payee adds words such as “without recourse” to the back of the check.

Check cashers should not accept such items.