My wife and I sold a property we had (Real Estate) and the buyer's mortgage bank issued a check to both our names (John Doe AND Jane Doe).

My wife deposited the check at our joint account (under our names, John Doe AND Jane Doe at a bank different than the issuing bank). Before doing so, she wrote "For Deposit Only Acct #111111111" and signed the back of the check.

Now, the issuing Mortgage Bank held back the funds, alledging that we both need to endorse the check in order for the deposit to clear. The issuing bank says writing "For Deposit Only Act# 111111111" is not enough to release payment on said check.

My argument is that writing "For Deposit Only Acct #111111" (jointly owned by check benefficiaries) and the jointly owned account number is enough to clear this check.

I am aware of the "AND" issue here, the question is whether "For Deposit Only Act #111111" (jointly owned by both beneficiaries) trumps all "AND" issues.

Who is correct on this?

If the issuing bank had indicated on the check that the indorsement of all payees would be required, they'd have a stronger argument. But if the check was promptly returned unpaid because of the missing signatures (by promptly, I mean returned by the business day after it arrived at the issuing bank for payment), it basically holds the "trump cards" in this game. I'd suggest you and your wife indorse the check and get it redeposited, quickly. If you can't both get to the bank, ask your bank if it can stamp the check "Credited Account of Within Payees."

Without the legend on the check, your indorsements would not have been required under the Uniform Commercial Code. A section of that law (section 4-205), effective in most states, allows a bank to accept a check for deposit from its customer(s), without indorsement. The bank's indorsement on the check provides a warranty to the paying bank and others that the depository bank credited your account or gave you cash for it, and that the bank held good title to it.

Although it's a throwback to older banking practice, it's not uncommon for larger checks to be returned when they don't have the indorsement of the payee.

Thank you so much Mr Burnett.

I forgot to mention that we quickly re-deposited (yesterday)the check with both signatures (my wife and I's).

Our real issue is that we now have:

1. several NSF charges due to this "Hold"
2. a CD we subsequently purchased (at a good rate) is in jeopardy
3. We literally have $46 cash and credit cards to live with until this check clears.
4. an overdrawn account. (1st time in my life) I was worried about ym credit too, but have been assured it won't be affected. I understand the severity of bouncing checks (criminal, each instance). It is been an anguished time for us.

The issuing bank, its employees, have been gving me the run-around for 36 hours. I have spent an enourmous amount of time on this issue.

I verified the issuer's chack, and there's no mention that both our signatures are needed.

Both banks talked today (Issuing Finance Controller and our bank's Asst. Branch Manager) and, apparently, the funds will be freed sometime on Monday or Tuesday once the Check 21 gets to the issuing bank (3 days from Thur).

I am left with decoding all the legalese surrounding this, to determine if I can request the issuing bank to pay for the NSF charges incurred due to their actions. (The CD's rate will be honored, though....it appears...we will see).

At any rate, I would like to ask you one more question regarding your reply. You said:

"But if the check was promptly returned unpaid because of the missing signatures (by promptly, I mean returned by the business day after it arrived at the issuing bank for payment), IT basically holds the "trump cards" in this game "

when you say "IT" , by "IT"....do you mean the restricted endorsement "For Deposit Only Act #111111"?

If so, it looks like they were wrong in denying payment. This is a fine point, and your expertise is very much appreciated.

In addition, I have contacted the FDIC for a clarification on this specific case of ours. Curiously, the FDIC help desk did not enough information and directed me to go ahead and file a complaint to get the questions answered...and if "in the positive", then proceed with the complaint.

Your time is much appreciated.

Have a great weekend.

I would not be so bold as to attempt to put words in John's mouth as he is quite the authority on such matters...but if I interpret his statement correctly, this "IT" he refers to is the issuing bank. Under the Uniform Commercial Code, the drawee bank has the right to return a check "endorsement not as drawn" if it does so by the conclusion of the business day after it receives the check. If it did indeed reject the check within this timeframe you won't have legal recourse against them.

Although your wife endorsed the check "For Deposit Only" and wrote your account number on the check, the drawee bank does not know that this represented a joint account.
Had your wife deposited this into an individual account on which you were not a signer, you would have up to three years to claim that you did not sign the check and received no benefit from it and sue the bank for the full amount of the check.

Was the mortgage bank being too careful in the case? Probably.

Did they really inconvenience you and your wife? Defintely.

Did they violate the law? Not in my humble opinion.

Thank you for the reply.

The fact that my bank accepted the check and placed the funds in our account, does that mean they accepted responsibility for the $$?

I am thinking that my bank checked ID, account number, and beneficiaries, and that by accepting the check they guaranteed the funds reached the intended beneficiary.

If so, the issuing bank had no rights in recalling the funds AND my bank had no right in handing them over.

The more I dig, the more interesting this gets. I guess, since we are broke for now, reaserching this case....this is my entertainment, at least until next Tuesday . :P

thanks for your consideration.

Thank you for your reply and the information provided. I still have not received the money. It is a matter of calling each day and documenting it.

We have about 7 instances of NSF due to this. I am documenting that too, as I am already thinking about the next step: asking for reimbursement from either my bank (which handed my money over) or the mortgage company (which 'recalled' the check). I have to find out if the mortgage company held the check for longer than one day when considering the deposit. I need to find out how to read the numbers they put on the back of the checks. I will call them specifically for this later in the week.

I am also awating the FDIC response in regards to "For Deposit Only Acct# 111111", and to see if the FDIC rules should have forced the mortgage bank to accept that restrictive endorsement.

Again, thank you so much for your time.

The FDIC rules really have nothing to do with indorsements on checks. That's strictly a matter for the state's version of the Uniform Commercial Code. I apologize for not providing an antecedent for "IT" in my earlier post. Crowman3 was exactly right, however.

It will certainly not do you any harm to ask for all or part of your NSF fees back from one or both of the banks. As much as I think the issuing bank overreached when it returned its check, and therefore might be convinced to return some of your hard-earned funds, your depository bank had two opportunities to take care of the problem without in any way affecting your account.

First, the bank could have stamped a "credited account of within-named payee" on the check when first deposited. That would most likely have short-circuited any desire of the issuing bank to return the check for a manual indorsement. Second, when the check came back to the depository bank, it could still have hit the back of the check with the same indorsement stamp and sent the check back on its way to the issuing bank, notifying you of its action. Again, there would have no charge-back to your account, no fees, no bounced checks. So your depository bank might be of a mind to reimburse you for some of the fees run up in this mess.

Thank you so much, gentlemen.

This is encouraging to me, I am glad to hear there is still a bit of hope. I will pursue it once I get my money, again.



The money is still not in the account. we are living on credit cards at the moment. Thankfully, the next "unavoidable" payment comes due on the 1st of Sept...and the banks have assured us that things would clear up by the 26th of August.

Why so short on cash? I am wrapping up my doctorate at this time, and not working. These proceeds were meant to be more than enough to help us through the final stages and the transition after graduation.

Again, thanks much for your expertise and experience. I will surely keep you posted.

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each state has individual bonds.

Just to clarify: If a check is presented on Monday, in many cases it arrives late in the day. "Presentment" occurs during Monday evening's update of the paying bank's computer system. The paying bank's deadline for returning the check is Tuesday at midnight (not Monday).

Just a quick 'does this make any difference' for the gurus - the original poster indicated that the wife wrote 'for deposit only XXXXXX' and then signed the check, I assume, with her name only. Would it have made any difference if the wife had left it at 'for deposit only' and not signed the check?

In most states the issuer of a check has three years to return a check for indorsement purposes. So I am not really sure why people are getting so focused on the midnight next business day deadline. The check was in fact missing an endosement and the issuer was within its rights to return it for that reason. Yes they would have been protected by the warranty but that warranty does not prevent them from looking at the check and returning it when it is clearly missing an endorsement.

Sorry to be mean but I think you were the one at fault. After all you have said the check was made payable to you AND your wife and yet you couldn't be bothered to sign the check before she took it to depsoit.