We looked at the front of a check several weeks ago, it is time to look at the back. At first glance there isn't really much to see. Usually, the only relevant thing on the back of the check is the signature line.
The signature line on the back of the check is extremely important, and often handled incorrectly. It is deceptive in its simplicity, it is one of the most important parts of the check. Signing the back of the check, or "endorsing" it transfers ownership of the check. When you sign the check, you are assuming responsibility for the check as well.
Assuming responsibility. What exactly does that mean?
Recall that a check is, in essence, a contract between you and the person that wrote it out to you. They are agreeing to transfer funds to you. By signing the back of that check you are agreeing to receive those funds, take possession of them, and be completely responsible for those funds, even before you receive them.
If that check is no good, you are liable for the check. You took ownership and responsibility for the check. If you deposited the check in your bank account, the bank will subtract the amount of the check from your account and charge you a fee for depositing a bad check. If you cashed the check, the bank will take money out of your account for cashing a bad check, and also charge you a fee.
The reason for the fee? Essentially, the bank gave you an unsecured, short term loan when they let you use that money while the check was still out and had not yet been returned unpaid.
Now that we have talked about the importance and significance of endorsement, let's look at how the endorsement should be done.
The back of the check should be signed exactly the same way as the front of the check is made out.
But that's not MY signature, I don't ever sign with my full name! You might be thinking.
In that case, sign your name as it appears on the front of the check and then resign like you normally do underneath it.
But they misspelled my name! Same as above, sign it wrong then sign it right.
If the front of the check is made payable to you AND someone else, you both need to sign the check.
If the check is made payable to a minor, the legally responsible guardian can sign the back of the check as follows:
The name on the front of the check
the words "A minor by"
The guardian's signature, followed by the relationship of the guardian, aka, "mother"
Generally, this is all there is to signing the back of a check. Writing the words "For deposit only" is NOT an endorsement, the check still needs to be endorsed. Although, writing "for deposit only" restricts what can happen to the check and it often done for security.
There are other ways to endorse a check, but don't do them. I won't even go into them here. Any financial institution paying even a little attention will invalidate the check if you try to endorse it using another method and you will have to go back to whoever made the check out to you and get a new check.
