A check that has been written to be payable to one person that is endorsed by that person to a third party is called a third party check.  There is no law requiring banks to accept third party checks.

National banks set their own policies whether or not to accept third party checks and set their own rules as to the policy necessary to cash a third party check.

Signing over a check may be as easy as having the payee endorse (sign) the back of the check, while the person cashing the check will sign below this signature.  Some institutions require that the third party to whom the check was endorsed hold an account with them to ensure the funds if something goes wrong. 

Other banks will require that the payee be present to verify the endorsed signature.

Fraud Alert

Be aware that endorsing third party checks has become a fraudulent activity.  One scam involves a buyer purchasing a product from a private party and attempting to pay with a check made out to the buyer for more than the item is worth.  The buyer will then sign the check over to the private seller and ask for change.

The second scam involves a work-from-home advertisement where the job poster is looking for an assistant to deposit checks and wire the job poster the money out of country.  This scam follows many different scenarios such as an auctioneer who can't receive the funds because they are out of the country or a businessman receiving payments from clients. In all cases, the scammer sends the employee, ie. Unsuspecting victim, a third party check signed over to the victim, who then deposits the check in a personal bank account and wires the funds to the employer, ie scammer.  When the checks don't clear, the victim is responsible for replacing the money.

How to Endorsement a Check

If a check is made out to two parties (and), both parties must endorse the check.

If a check is made out to either/or then any or all parties can endorse the check.

If it is unclear and/or then any or all parties can endorse the check.