Blank

With a blank endorsement, the payee(s) endorses the item as it appears on the face of the check. A blank endorsement is the most common type of endorsement and is the least restrictive and does not limit negotiability.

A blank endorsement does not include any other statement, conditions or restrictions. Blank endorsement contains the payee's signature and may contain 1 or more other endorsements.

Joint Payees:

Joint Payees With The Connecting Word "Or"

When a check is payable to 2 or more payees and the connecting word is "or," either of the payees may endorse and negotiate the check without the endorsement of the other payee(s).

Joint Payees With The Connecting Word "And"

When a check is payable to 2 or more payees and the connecting word is "and," all payees must endorse the check.

• Deposit Exception: 
  • If a check is endorsed by all payees and going into a Capital City Bank (CCB) account that all payees sign on, they do not have to be present. Verify the signature of the "absentee endorser" by viewing the account signature card.

• If any one of the payees listed on the check is not a signer on the account, that person must be present and provide valid ID for the check to be negotiated. 
  • For example: Check made payable to John and Jane Doe, John is at teller window to deposit the check; John does not sign on the account. John must be present for Mary to negotiate the check.
    

CCB Client/Person "and" Financial Institution as Joint Payees

When a check is payable to a CCB client and a financial institution (for example:  bank, credit union) and the connecting word is "and," all payees must endorse the check.

• When a check (for example: insurance check or draft, government checks) is made payable to CCB and our client, it is because we are a lien holder on the client's property (for example:  car, boat, equipment, farm crops). As the lien holder, CCB has a legal claim on the specific property.
• Before negotiating the check, refer the client to the designated CCB loan office on the loan. If they are not available, refer the client to another CCB loan officer.
• The check must be endorsed by the client AND a CCB loan officer before it can be negotiated.
• The CCB loan officer gives guidance on any special disbursement instruction, if any.
• Checks made payable to a CCB client and any other bank or financial institution requires approval by one of the following associates: Lead Teller (LT), Client Experience Manager(CXM/CXMII), Remote Facility Supervisor or an Officer of the bank. The approving associate's initials are required on the front of the check.
  • The check would be accepted based on the client relationship, purpose of check (conversation of why check was issued), and amount of check.
  • Proper endorsement is required (for example: Wells Fargo Bank by name and title).
  • If warranted/necessary call the financial institution to verify endorsement.
    

CCB Client/Person "and" Business as Joint Payees

When a check is made payable to a person (CCB client) and a business and the connecting word is "and," all payees must endorse the check. For example, insurance check/draft made payable to our client and a body shop for car repairs (for example: ABC Body Shop and Joe Smith).

• Checks made payable to our client and a business requires approval by one of the following associates; LT, CXM/CXMII, Remote Facility Supervisor, or an Officer of the bank. The approving associate's initials are required on the front of the check.
  • The check would be accepted based on the client relationship, purpose of check (conversation of why check was issued), and amount of check.
  • Proper endorsement is required. Example: Body Shop by name and title.
  • If warranted/necessary call the business to verify the endorsement.
    • Note: the business can use their endorsement stamp on the BACK of the check or write the name of the business exactly as it is written on the 'Pay to the Order Of' line. The business owner must sign the check and can add restrictions like "for deposit only".
      

No Endorsement

• Ask the payee(s) to endorse the check.
• Deposit Exception: If the payee/client is not present (for example: night depository, Automated Teller Machine (ATM), mail, messenger), verify the payee and account owner are the same. Stamp the check with the endorsement stamp in your office. 
• The endorsement stamp should not be used if it is an insurance check, government check or if the check contains specific instructions for endorsement (for example: Endorsement by all parties required prior to negotiating).

Endorsed Improperly

• If a check is improperly endorsed, ask the payee(s) to re-endorse exactly as the check is made out (for example:  Check made payable to J.E. Smith, but endorsed as Jim Smith).
• Deposit Exception: If the payee/client is not present (for example: night depository, ATM, mail, messenger), verify the payee and account owner are the same. Stamp the check with the endorsement stamp, "credit to the account of the within named payee."

Qualified

A qualified endorsement usually contains the phrase Without Recourse with the payee's endorsement. Without recourse relieves the endorser of their legal responsibility of guaranteeing payment if the check is not paid.

• This type of endorsement is not accepted without Officer Approval.
• The approving officers first initial/full last name and phone extension are required in the upper left hand corner of the check.

Conditional

Conditional endorsements stipulate a condition that must be met before the check can be negotiated. For example: Endorsed by payee with stipulations and paid to another party; "pay to Billy Cooper when drywall job is complete."

• This type of endorsement is not accepted and cannot be negotiated by CCB.
• If the bank accepts this check and the conditions are not met, the bank may have difficulty recovering the funds from the endorser.

Restrictive

A restrictive endorsement specifies the way in which a check can be negotiated. The most common form of restrictive endorsement includes both the payee(s) signature and the words For Deposit Only.

• A check endorsed for deposit only cannot be cashed, it must be deposited.
• Items containing for deposit only without the payee(s) signature must be returned to the client for proper endorsement. 
• Financial institutions can return an item for improper endorsement if it only contains the words for deposit only.

Special

A "special" endorsement allows a payee to make a check payable to another person or entity. This type of endorsement names the party to whom the check is being transferred.

• For example, if John Smith, the payee, wants to make a check payable to his wife Mary Smith, he would write "pay to the order of Mary Smith" on the back of the check is being transferred.
• When Mary endorses the check for negotiation, this creates a third party check.
• As a general rule, third party checks are not accepted for deposit or cashing.
• Refer to Third Party Check - Double Endorsed procedures.

Third Party Check Review

Caution is required when third party checks are accepted.

• Third party checks may be accepted with approval from a LT, CXM/CXMII, Remote Facility Supervisor or an Officer of the bank.
• The approving associates first initial/full last name and phone extension are required in the upper left hand corner of the check.
• Based on the client's account balance, Insufficient Funds (NSF), chargeback and overdraft history, a 7-day exception hold may be appropriate.
• Things to consider in acceptance of a third party check include:
  • Type of check
  • Amount of the check
  • Purpose of the check
  • Is the item one that makes sense for the client
  • Client Relationship - Know Your Client
    • How long has client banked with CCB?
    • What are the account balance, NSF and Over Draft (OD) history?
    • What type of account(s) does the client have?
    • What is the average balance in the account(s)?

Other Considerations

• Do you know the first endorser and their reason for endorsing the check over to the presenter?
• Is the payee (first endorser) present?
• If a client is presenting third party checks from the same payee routinely, you may ask the client to add the payee to their account, or suggest the payee open an account.

Third Party Rule Exceptions

An exception to this rule would be a Money Service Business (check-cashing service) that has been pre-approved by the Bank Secrecy Act (BSA) Department. Many of the deposited checks will be third party checks.

• While the bank does accept some risk in these circumstances, clients who offer check-cashing services typically have sufficient balances to cover returned items.
• In addition, these clients are required to have policies and procedures for the identification of the third parties for whom they are cashing checks and the bank relies on the clients to ensure that appropriate identification is obtained prior to cashing checks from third parties.
• Pre-approval does not negate "reasonable precautions" when accepting a deposit.
• Contact the BSA Department for more information on third party checks in business deposits.