There are three methods of transferring a check:
- By operation of law – A transfer by operation of law takes place where the title, or ownership, to a check passes to the executor, administrator, or other personal representative of the holder of the undeposited check on the holder’s death.
- By assignment – A transfer by assignment takes place in any transaction where the holder of a check assigns his rights to it under the general law of contracts.
- By negotiation – A transfer by negotiation takes place where the owner of the check agrees to transfer ownership of the check or the right to the money promised by the check in exchange for a benefit from the person that they are transferring the check to.
What Is an Endorsement and What Makes an Endorsement of a Check Proper?
An endorsement is described as the writing on the back of a negotiable or other instrument. It may consist of a mere signature, with nothing more written. There are various kinds of endorsements:
- Blank – A blank endorsement specifies no particular endorsee and may consist of a mere signature. An instrument payable to someone and endorsed in the blank becomes payable to bearer and may be negotiated by delivery alone until specially endorsed. In practice, a blank endorsement usually consists of the signature of the endorser alone on the back of the check.
- Special – A special endorsement specifies the person to whom the instrument is to be payable. For instance an endorsement reading "Pay to the order of B" and signed "A." A special endorsement in the style "Pay John Doe" and signed by an endorser named Robert Smith is a good special endorsement.
- Restrictive or Conditional – A restrictive endorsement is a conditional endorsement, an endorsement prohibiting further transfer of the check, an endorsement signifying a purpose of deposit or collection, or an endorsement for the benefit or use of the endorser or another person. Endorsements "for deposit," "for collection," or "pay any bank" are good examples of restrictive endorsements.
When an instrument is payable to someone in particular and an endorsement is necessary to transfer title, the endorsement must be in writing, and the proper place for it is on the back of the instrument. However, it is not absolutely essential that the endorsement be placed on the back. Instead, the endorsement may be written on the face. Unless an instrument clearly indicates that a signature is made in some other capacity, it is an endorsement.
Do I Need a Lawyer Regarding any Problems with the Endorsing of Checks?
Although anyone may properly endorse or have a check endorsed over to them, problems may arise when checks are improperly endorsed or fraudulently endorsed to someone they were supposed to be. A good financial attorney may be able assist you in determining whether a check was properly endorsed by or to someone, and help you recover your money if you are at a loss because of an improper or fraudulent endorsement.