There are specific regulations included in the Uniform Commercial Code (UCC) that involve endorsement of negotiable instruments. Under the UCC guidelines, an instrument becomes negotiable (transfer of title and possession) upon endorsement, which requires the signature of the party to whom the check was paid to the order of.
The Uniform Commercial Codes recognizes several types of endorsements. The rules regulating individual financial institutions will govern which of these is acceptable in terms of allowing you to cash the check.
A general endorsement is the simple act of the holder of the note, that person that the note has been payable, signing the check for deposit or cash.
The special endorsement names a person other than the person to whom the note has been payable. In this situation, the original holder assigns the note by means of ‘pay to the order of’ with the name of the person to whom the note will be transferred, accompanied by the original holder’s signature. Not all institutions will honor these third party endorsements.
As the name implies, a restrictive endorsement places restrictions on how the note may be negotiated. The most common case would be the original holders request that the note not be cashed for money but instead deposited into the account. The original holder may do this by printing the request ‘for deposit only’ with the account, number in which he wishes the money to be deposited accompanied by a signature.
The restrictive endorsement is the safest way to endorse a check to avoid having a lost check cashed by another party.
Where to Endorse a Check
Endorsements must be made on the back of the left end of the check. This means when you flip the check from the front to the back the date, dollar amount, and signature line are at the bottom of the check face down.