How to Endorse a check in Canada

Endorsing a Check in Canada

When a person writes a check to you, it is standard practice for you to endorse the back of the check before you deposit or cash it. Endorsing a check in Canada is straightforward as it only needs to include any further details in addition to signing your name. Providing this information allows the bank to process the check efficiently.

Although a signature is the most important criteria, there are further steps you can take that can protect you from fraud and enable you to dictate how the bank process your payments. Read on to find out all you need to endorse a check in Canada.

How to Endorse

To ensure proper endorsement, the payee’s name on the front of the check must match the name signed on the check’s back. If you misspell or incorrectly write the name, you may sign on the incorrect version and sign again with the correct name.

Where to Endorse

A standard check has a 1.5-inch space at the back you can sign in. This space is often known as the endorsement section, with marked lines and instructions like “Do not write, stamp, or sign below this line.” Ensure you keep all your signature and other instructions or noted within that area.

Blank Endorsement

The easiest way to endorse – often also the riskiest, is to sign the check without inserting additional instructions. This method is known as a blank endorsement, wherein you sign your name within the endorsement space.

However, you should only try this if you’re immediately depositing or cashing the check. For instance, a blank endorsement seems reasonable if you’re within the bank premises of making the transaction from a remote location.

ATM Deposit, Mailing, and More

If you want to mail the check to your bank or deposit it using an ATM, you may try a different tact. You may wait until you’re ready to deposit before signing the check, or you insert a restriction to the endorsement. B

lank endorsements are dangerous because someone else can steal the endorsed check and deposit or cash it in an entirely different bank account.

Restrictive Endorsement

A restrictive endorsement ensures that a check is deposited into a specific bank account. You can apply this method by adding your account number alongside the endorsement, providing clear instructions that the funds may only be deposited into your bank account.

You can do this by writing “For deposit only to xxxxxx” alongside the endorsement. It is harder for thieves to access your funds if the check is misplaced or stolen.

Another option is to write “For a deposit to payee account only,” which would require thieves additional access to the account in your name. Depending on the circumstance, you may or may not need to sign if the account number is specified on the check.

Signing over to someone else

It is possible to sign over a check to another person, ensuring you pay that person with the check you’ve received.

Although it isn’t an ideal way to pay someone, you may do so by writing “Pay to the order of “ just below your signature, inserting the name of the new recipient.

Keep in mind some banks do not accept this form of endorsement due to the possibility of fraud and theft. Consult the banks involved before trying out this type of endorsement.

No Endorsement

That said, it isn’t mandatory to endorse a check. Some banks allow customers to deposit a check without any requirements like account number, signatures, or other endorsement instructions. No endorsement often ensures your information is private.

Without an endorsement, someone can’t access your signature or bank account number except the bank provides the information during processing. As an extra tip, you may also write “for deposit only” in the endorsement space.

Although that’s not an endorsement in the truest sense of the word, most financial institutions will be hard-pressed to cash that type of check for anyone.

Who signs to Endorse? 

In many instances, it isn’t clear who signs the check. To clarify, it is the recipient who needs to endorse the check. The check writer already signed on the face of it.

Checks payable to more than one person

If a check is payable to multiple parties, how should it be endorsed? Must all the recipients sign or just one person? It all depends on what’s written on the check. If the check writer adds “and” between the recipients’ names, both parties need to sign.

Business checks

If you own a business and accept checks, it has a different endorsing process. The check isn’t payable to you but your business. That means you need to endorse on behalf of the business.

Businesses are separate legal entities that can sue and be sued and operate independently of the owner. That means anyone who endorses for the business needs to have the requisite authorization to do so.

FBO Checks

The initial payee must first endorse a check made out to one party for another’s benefit. For instance, the check might be made out to a retirement account custodian for a turnover transaction. The custodian will handle the check, and you need not endorse it.

Why you need to endorse checks

When someone pays you with a check, that payment is made out to you. The only person legally allowed to collect the money from the check writer’s account is yours truly. Nonetheless, the most convenient way to deposit or cash that check is to give it to your bank and let them process it.

Endorsing a check means you permit the bank to receive the check on your behalf. Also, you can depose it a check without endorsing provided it is small enough and the exact match with the payee’s name. So far it isn’t from some organization that requires endorsement like insurance companies.

However, financial institutions like credit unions and banks often accept endorsed checks on the assumption no issues will arise. That said, if you want to receive your money promptly, endorse the check correctly.

Even if your bank allows you to deposit without endorsement, that check may come back sometime later to haunt you, thus allowing the bank to take those funds from your account until everything’s sorted.

Always ensure you wait as long as you can before signing a check, no matter the method of endorsement. An excellent strategy is to sign the check in the bank or immediately before making a mobile deposit.

If you endorse a check before you’re ready to cash or deposit, it’s easier for someone else to steal the check and deposit it in their bank account.

FAQs

How does Mobile Deposit endorsement work?

If you want to endorse a check with your mobile device, you’d need to follow your bank’s app instructions.

Some banks may require you to indicate you’re making a mobile deposit. Although it is possible to ignore these instructions doing so can have severe consequences for your transactions.

Do you have to sign the back of a Check in Canada?

Some banks permit checks to be cashed by a person other than the recipient named on the check. Although not always mandatory, it is risky to leave the back of a check unsigned.

Who signs the back of a check?

The check writer signs the front while the recipient signs the back. Both front and back signatures are often known as “endorsing” the check. It is of utmost importance to endorse the check before depositing, cashing, or transferring it to another person.

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