As a local slumlord, I rent to a lot of tenants who don’t have their own checking accounts. What they do have, though, are checks made out to them from their employer. And I want ‘em.
I’m kidding – I’m not really a slumlord.
But I do occasionally need to accept & deposit checks made out to another person. When I find myself in this situation, I have the person “sign the check over” to me. It’s pretty easy, and saves the time of that person having to deposit the check at their bank, wait for it to clear, then write me a separate check that I in turn need to deposit.
See, a check is a special legal instrument called a negotiable instrument, and you can do all kinds of fun things with negotiable instruments.
Here’s how to sign a check over to someone else
- Indorse (that is, sign your name on the back) of the check as you normally would.
- Beneath your signature, write the magic words “Pay to the order of Eddie on Everything” (or whomever you’d like to sign your check over to).
- Have that person then sign their name beneath where you’ve written those magic words.
According to Article 3 of the Uniform Commercial Code (UCC), that person may now deposit that check at their local bank. They have become what’s known as a holder in due course, and have, in effect, become the payee.
Bear in mind that while the UCC provides that the other person is now the payee, any party (including a bank) is free to decline to honor that check. Some banks won’t cash so-called “third party checks” for their customers.
If your bank is one of the banks that won’t allow you to deposit third party checks, and if you’re a good customer, I’d recommend that you find a new bank. I’ve been using Wells Fargo for years, and I’m very happy with their service.
Note: You should probably not write “For Deposit Only” on checks indorsed in this way, as that may complicate things.