A Guide to Cashing Checks That Are Payable to Multiple People

A Guide to Cashing Checks That Are Payable to Multiple People

Who is responsible for signing a check that is made out to two or more people?

Checks are typically written to be paid to a specific individual or organization; however, it is not uncommon for a single check to be written out to more than one name.It’s possible that a cheque will be written to a married couple, multiple roommates, or any other group that has a joint interest or ownership in something. A single word on these kinds of checks determines how they can be processed as a whole. The crucial question is whether the word “and” or “or” appears between the names of each person.

When there are many names on a check, “and” indicates that each individual must sign the check. The word “or” typically restricts signature authority to only one of the payees.

Checks that utilize the word “and” on the payee line require the signature of each and every person listed on that line. For instance, both John and Jane ought to put their names on a check that is made out to “John and Jane Doe.”

Checks with an “and” Can Be Tricky

The act of signing the back of a check, sometimes known as “endorsing” it, is required in order for a check to be cashed or deposited, and banks are obligated to investigate the identities of everyone who does so. If a check is made payable to two parties and the funds are deposited into an account that bears both of their names, there is very little risk involved. However, if somebody wants to cash the check, there is a risk that one of the parties will forge the signature of the other party and run off with the money.

When the names on the check and the names on the account to which the check is being deposited do not match, the bank may follow a set of predetermined criteria.

Does Everyone Have to Sign at the Same Time?

Some banks have a policy that requires all of the payees identified on a check to sign their endorsements simultaneously in the presence of a bank staff member. Everyone must present a proper form of identification in order to demonstrate that they are authorized to endorse that check. Checks can be cashed at other financial institutions even if only one of the payees has an account with that particular financial institution.

When it comes to handling checks for big amounts of money, financial institutions are extra careful.

If it’s just for a modest amount, like $5 or $10, it’s usually possible for a single individual to endorse and deposit the check without having to bother bringing everyone else around.

Deposits are easier

If the check is going to be deposited instead of cashed, then the procedure should be a lot less complicated. This is especially the case when all of the payees are members of the same account. For instance, the account may be a joint one held by a married couple, and the check could be signed with both of their names on it. In this particular scenario, it’s possible that only one of the signers on the check is required to make the deposit rather than both of them. 

‘Or’ Means Anybody

In the vast majority of situations, just one party is required to sign cheques made payable to multiple parties using the term “or.” For instance, a check that is written out to “Jane or Pat Doe” can be signed by either Jane or Pat, as the case may be. However, depending on the circumstances, it may be necessary for each payee to provide their signature. 

If the payment is especially significant or if it is part of an insurance or legal settlement, you should speak with your bank or consult an attorney in your state about how to handle the check-in order to determine how to process it. Even if it only reads “or,” it’s still a good idea to have everyone’s signature on the check just in case. It might even be needed.

What If It Isn’t Clear Enough?

There are certain checks that do not specify “and” or “or” anywhere. In this particular scenario, the solution is not as obvious.

In most cases, you can treat the check as though it said “or” as long as you comply with the legal requirements. The Uniform Commercial Code (UCC), which sometimes acts as a pattern for how states and banks conduct these transactions, stipulates that “ambiguous” checks can be negotiated by anybody mentioned on the check. This provision allows for checks to be negotiated by anyone named on the check.

Overrides of Bank Policies

Your financial institution is exempt from adhering to the UCC’s requirements. When dealing with these checks, financial institutions should exercise more vigilance in order to protect themselves from financial losses. When there is any semblance of uncertainty regarding the check writer’s intentions, the policy of several institutions mandates that all signatories be required to appear on the check. They might even insist that everyone be present in order to sign in front of a bank representative, making it impossible for you to just send it in over the mail or deposit it using an ATM.

You could give it a shot and see if you can cash or deposit a check that has the signature of only one of the payees on it. This is one approach. There is a chance that the bank will refuse to accept your deposit and will demand that you obtain the missing signatures before you can make another deposit. This process might take several days, weeks, or even longer than that to complete.

Contacting the banks involved (both the bank the check is drawn on and the bank to which you’re depositing it) and asking what requirements they have is a safer strategy than any other technique. You shouldn’t be shocked if you get varying replies from different people because bank policies aren’t always easy to understand or widely understood.

If at all feasible, speak with the person who will actually be handling the deposit, such as a teller or the manager of the bank.

You Should Never Rule Out the Possibility.

Checks may be accepted with a single signature in some circumstances, even though the policies of the bank demand multiple signatures, because it is possible that the missing signatures will not be noticed. You are the only person who can truly know what is best for you. Think about the different options you have and how easy it will be to get everyone’s signature. Also think about whether or not you can wait if the bank needs more signatures.

Making Out Checks to More Than One Person

When you write a check to more than one individual, you need to keep in mind that the process of depositing the funds might be made relatively simple or rather complex for the beneficiaries of the check. The option that is best for you will depend on what it is that you want to achieve, the degree to which you trust the two (or more) people involved, and other considerations such as legal and tax difficulties.

The word “or” simplifies things. If you are not concerned that any of the individuals will steal the money, you have the most flexibility when you list the names separated by “or.”

“And” ensures that everyone is up to date. If you want to be absolutely certain that everyone is aware of the check, it is best to use the conjunction “and” in the sentence. Things could go a little more slowly as a result of this, but this might be for the best.

Wedding Gifts

If you’re going to write a check to a newlywed couple, you should give this some thought. It’s possible that one or both of the partners will decide to change their surname. It’s hard to go wrong with money as a present, but there are some potential pitfalls that can develop if you make the check out to both of them with the word “and”:

It’s possible that one of them will go and change their name, and then the name on the check won’t match anymore.

You could think that one of them is going to change their name, but that assumption is not correct.

Even if there is a slight mismatch in the names on the checks, newlyweds will typically still deposit them. This occurs frequently in banking environments. However, in order to deposit the money, you may need to make a trip to the branch or fill out some more paperwork and make a few phone calls. Either write the check using the word “or” or inquire as to how the couple would most like to be showered with presents in order to make the pair’s deposit as painless as possible for them.

Questions That Are Often Put to Rest (FAQs)

When endorsing a check, what should you do?

Always make sure to endorse a check on the reverse, above the line that says something like “Do not write below this line” or “Endorse here.” Include everyone’s signature who is included on the “Pay to the order of” line on the front of the check for checks made out to several people using “and.” This line is located on the front of the check.

Who may put their name on a check?

Only those people whose names appear on the “pay to” line of the check are allowed to endorse the back of the check. If you want to give the check to another person, you need to endorse the reverse of it and write “Pay to the order of [First and Last Name]” in the section that is designated for endorsements.

Can you pay a check that has been written out for both of us?

Cashing a check that is written out to more than one person is possible, although the process is typically more onerous than depositing the check. In order to get cash from the bank, both parties might have to show up in person and sign papers.

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