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Proper Endorsement for 3rd Party Check

What is the proper endorsement for a third party check? Second party signs and then puts "Pay to the Order of" name on back of check? Third party then endorses below and submits to bank?

Let's suppose that a check is payable to Sam Smith. He wants to give the check to Harry Potter. His endorsement should start with the instruction, and close with his signature:

Pay to (the order of)
Harry Potter
/s/ Sam Smith

Then Harry can endorse the check to his bank. He can simply sign his name, or he can precede his signature with an instruction:

[Pay to Last National Bank]
For deposit only
/s/ Harry Potter

Harry should realize, however, that his bank may not accept third party checks for deposit. That's because it usually has no way to verify the first endorsement, and forged endorsement claims can take up to three years to come back against the bank's own endorsement warranty. Harry should ask the bank about its policy before taking the check from Sam.

Published on 4/04/07