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This article was co-written by Michael R. Lewis. Michael R. Lewis is a retired Texas executive, entrepreneur and investment advisor. He has over 40 years of experience in Business & Finance, including the position of Vice President of Blue Cross Blue Shield of Texas. He holds a BBA in Industrial Management from the University of Texas at Austin.
This article has been viewed 15,950 times.
A third party check is an individual or business check drawn to pay another person. Financial institutions in the United States are not obligated to accept third-party checks, and many other banks accept them very rarely than in the past. However, if you are in a situation where drawing a third-party check is the best choice, be aware of the best practices of this process in advance to improve your chances of success.
Steps
Plan Before Signing
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Consider your options. Due to tighter identification and banking security regulations in the United States, you may have a hard time finding a bank that accepts a third-party check. [1] X Research Source
- If you have a bank account and have margin or cash for the check to be signed for you, it will be easier for you to do so, the next step is to just sign your check (or cash it) to the bank. third-party
- Drawing on a check is perhaps more convenient (by separating out a middleman, so to speak), but that doesn’t seem to be the case anymore.
- Take a look at electronically transferring funds to your third party, either through an existing bank account or a service like PayPal, if you’re looking for a convenient option.
- If you: 1) have a check drawn to you; 2) no bank account; 3) need to pay a third party with the amount on the check drawn to you, this is the only real scenario you might want to try to sign a check. See section III of this article for cases in this scenario.
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Confirm that the person you want to write on the back of the check, is a third party who will accept the drawn check.
- Ask the person if he/she used a third party check at his/her bank before. This will improve your chances of success, as there is no law requiring a bank to accept a third-party claim check.
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Confirm that the third-party bank accepts these checks and is aware of its specific procedures. If you can’t reach them right away but know their branch, call the customer service number to request a special confirmation for this type of check.
- Ask your bank for any special procedures required for them to accept third-party checks. Some banks have enacted their own rules to control these procedures, for example requiring both parties to have bank accounts to ensure sufficient funds for the transfer.
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Go with a third party to meet in person at their bank. Completing this direct signing process may be required by the bank and if so will almost certainly improve your chances of success.
- Bring the proper identification, especially if it’s not the bank where you open the account.
Signing On Checks
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Endorse the check as usual, except keep your signature in the upper part of the confirmation area. If there are 3 lines on the check, sign the top line. This is not the time for pomp, because you will need the entire time to complete the procedure.
Please print “Pay to the Order of” and the name of the third party in the middle (or 2nd line) of the confirmation area. If you do not have enough space, you can use “FBO” (Beneficiary), but you may want to check with your bank first.
- Write neatly, especially third-party names. Spell check.
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Do not let a third party sign the check until the check has been deposited or cashed. Have the third party (the beneficiary) sign the bottom part (or third line) of the confirmation area. If he/she does not, put an “X” to indicate where he/she should sign, and/or attach a note politely reminding where to sign. cheque. .
Give the check to the payee for deposit in his/her bank as usual. As long as the bank accepts a third-party check, the escrow process will perform exactly as the check is signed in person.
Consider Alternatives
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Open a bank account, deposit for the use of the check, then pay a third party. As noted, you can almost only draw a check because you don’t have a bank account. If you can open a bank account, do so, because it will be easier.
- To open a checking account with a US bank, you need to be 18 years of age or older, provide basic information such as your full name, contact information (phone/email number), and security number. social life; and present a government-issued identification card. . [2] X Research Source
- You should find a free checking account at one of your local banks. Or look for online banks, where free checking accounts are typically opened.
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Ask the original check issuers to void the check and sign a new one for a third party. This is more like working with your aunt than having a big company mail you a refund, of course. .
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Ask the original check issuers to add “or whose check is paid on demand” after your name on the check (and which future checks will pay you). Checks with the entry “or payee on demand” after the payee’s name may be deposited or cashed (basically, depending on the bank’s policy) by the person shown on the check. . [3] X Research Sources
- Third parties should be prepared to show identification when depositing or cashing a check, depending on the financial institution’s policy, especially for large checks.
- Checks drawn with the entry “cash or pay to bearer” or only “pay to bearer” shall have the same effect.
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Use a service that pays cash for checks. You will pay for this service, but you will have cash to use for your third party payments.
- Cashing a check is in the range of 1% to 12% of the amount on the check, so shop around to get the best price. Some local retailers, including Wal-Mart, offer this service. . [4] X Research Sources
- You will need a photo identification to cash the check.
Advice
- You will not have proof or receipt for the check in your bank account. Since the check is signed for acceptance initially, you may want to make a copy of the check as proof or receipt before signing it.
Warning
- Third-party checks can be the target of many dishonest acts, , [5] X Source of Research so become a cardholder only in signing third-party checks with people you know and trust.
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This article was co-written by Michael R. Lewis. Michael R. Lewis is a retired Texas executive, entrepreneur and investment advisor. He has over 40 years of experience in Business & Finance, including the position of Vice President of Blue Cross Blue Shield of Texas. He holds a BBA in Industrial Management from the University of Texas at Austin.
This article has been viewed 15,950 times.
A third party check is an individual or business check drawn to pay another person. Financial institutions in the United States are not obligated to accept third-party checks, and many other banks accept them very rarely than in the past. However, if you are in a situation where drawing a third-party check is the best choice, be aware of the best practices of this process in advance to improve your chances of success.
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