Checks are a very popular means of payment among workers and companies that handle large amounts of money.
But when you receive a check, cashing it isn't the only option. Checks can also be endorsed and given to a third party. Do you know what this is about? Keep reading and learn more about this option.
What is endorsing a check?
Endorse a check is an action that is taken to be able to deliver a check to another person. In other words, it serves to assign said payment order to a third person, and this third party becomes the new beneficiary or endorser of the check.
The endorsement is a signing which is placed on the back of the check by the person who issues it. However, this action can only be performed with checks that have been written to order or to the bearer.
If the check has the “no to order” clause, it will not be possible to endorse it.
How do you endorse a check?
To endorse a check, the person transferring it must take the following steps:
- Place on the reverse side The name of the new beneficiary of the check,
- Sign then
- Legal entities must complete with the expression “by power” or “p.p”.
Depending on the country, other information may be required, such as the identification number or official document of the new beneficiary, and their address.
How many types of endorsement are there on a check?
They exist five types of endorsement, these are:
- Blank: The endorsement is completed only with the signature.
- To the bearer: instead of writing the name of the payee, you write “the bearer”. This check can be cashed by anyone who owns it.
- To order or nominal: the name of the payee is entered. Only that person can collect it.
- In Procuration: includes the “in proxy” or “in collection” clause. It gives the endorser the power to present the check for judicial or extrajudicial collection.
- Under warranty: constitutes a real right of pledge. It has the clauses “under warranty” or “in pledge”.
What if I make a mistake in endorsing a check?
If the person issuing the check makes a mistake in the endorsement, the check will be rejected by the bank. In this case, a new check will need to be issued.
But when it comes to a spelling error, it can be solved by performing a clarification. This is done by placing the word “I say” followed by the correctly written sentence, and the signature below the clarification.
How many times can a check be endorsed?
Although legally There are no restrictions in Mexico that prevent you from endorsing a check several times, different banks may request to meet certain requirements for multiple endorsement of a check. The same is true in the United States.
In addition, it should be noted that when you endorse a check many times, you write more risk of loss or theft.
The case of Echeqs may be different, so it is recommended to check the information on the official websites of each banking or financial institution.
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