To endorse a cheque in Canada, the payee signs the back of the cheque and adds any special instructions like account numbers or mobile deposit restrictions.
You must endorse a cheque before you can cash it, deposit it, or transfer it to someone else. A blank endorsement is simply signing your name, whereas a restrictive endorsement means adding a condition or limitation like "For mobile deposit only" to your signature.
Endorsing a cheque should only be done if you’re ready to deposit or cash the cheque.
Here’s a guide to all the steps and details involved with endorsing cheques.
Key Takeaways
- Endorsing a cheque means signing it in order to access the funds.
- The payee endorses the cheque by signing the back.
- Special endorsement requirements apply for business cheques or with multiple payees.
- Hold times vary from 5 minutes to 8 days after endorsement, depending on the amount and institution.
What is endorsing a cheque?
Endorsing a cheque in Canada means the payee signs the back of a cheque to either authorize its deposit or transfer it to someone else.
Endorsing is important because it confirms that you and the bank are reading the cheque correctly. It also ensures that the cheque is directed to the correct recipient.
Receiving a cheque from someone else? If you’re the payee, you sign the back to endorse it.
Writing a cheque to someone else? If you're the one writing the cheque, do not endorse it. Sign the front, and the payee will endorse it on the back.
In some cases, a financial institution may require more than a signature for endorsement. You may need to include the payee's account number or a specific instruction like this:
"Pay to the order of [new recipient’s name]" or “For mobile deposit only.”
Countersigning vs endorsing: Countersigning is when someone pays you by cheque but you want to sign the cheque over to someone else (whose name isn't on the cheque). To do this, you endorse the back and write:
"Pay to the order of [new recipient name]."
The new recipient then countersigns underneath your signature.
If you plan to counter-sign, check with your bank to confirm its specific policies. Some institutions are hesitant to accept cheques endorsed to third parties due to potential fraud.
How do you endorse a cheque in Canada?
To endorse a cheque in Canada, the payee signs the back of the cheque to authorize its deposit or transfer. Mistakes in endorsements can lead to delay or even rejection by the bank.
Here are the steps to correctly endorse a cheque:
- Sign in the correct spot: The endorsement section is usually a line or box found on the back of a cheque.
- Use the correct pen: As with writing cheques, make sure to use a dark ink ballpoint or roller pen. Write neatly.
- Match the name: The payee's name on the front of the cheque should be the same as the signature.
- Add special instructions (if applicable): If transferring to someone else, write "Pay to the order of [recipient’s name]" above your signature. If depositing the cheque via mobile device, write “For mobile deposit only" above your signature.
Special rules may apply for endorsing business cheques vs. personal cheques. Inquire with a teller if you’re uncertain about your institution's rules.
Types of cheque endorsements
There are four main types of cheque endorsements in Canada, each suited to specific situations.
Here's a breakdown:
- Blank endorsement: This is when the payee simply signs their name on the back of the cheque. In other words, blank doesn’t mean no signature at all – it just means no special instructions. Blank endorsements are good for in-person deposits, but it’s not secure if you’re handing the cheque to someone else.
- Restrictive endorsement: This is when the payee endorses the cheque with a signature and adds a special instruction to restrict its usage, like "For deposit only" or “For deposit only to [account number].”
- Full endorsement: This is when the payee transfers a cheque originally made out to them to another person or entity. To do this, the payee writes "Pay to the order of [new recipient name]" on the back followed by the payee’s signature. You may have to be present at the bank with the new payee, and not all banks accept full endorsement.
You endorse certified cheques as well as personal cheques.
Business endorsements are a little different than personal endorsements. An authorized individual must endorse a business cheque on behalf of the business.
When do you need to endorse a cheque?
If the cheque is made out to you, you need to endorse it.
The recipient (aka payee) always needs to endorse the cheque to confirm their approval for the transaction. This is true whether they intend to deposit it, cash it, or transfer it to someone else.
- If the cheque is made out to you and you intend to cash it, endorse it.
- If the cheque is made out to you and you intend to deposit it, endorse it.
- If the cheque is made out to you and you intend to transfer it, endorse it.
- If the cheque is made out to multiple people (including you), endorse it.
With multiple payees, all parties must endorse the cheque if the word "and" is used (“Tim Carson and Ryan Wilson”). Only one party must endorse the cheque if the word “or” is used (“Tim Carson or Ryan Wilson”).
If you have a For The Benefit Of (FBO) cheque, endorsement works a bit differently. FBO cheques are "for the benefit of" a payee, but are often intended for a secondary recipient.
For example, a trust may issue an FBO cheque on behalf of an elderly person to their assisted living facility. The payee may be listed as "Happy Days Care Home FBO Jessie Bartlet."
With FBO cheques, sometimes both parties are required to endorse it. Other times, the facility is considered the custodian and can endorse it. Check with your bank about its FBO cheque policies.
Getting money after endorsing a cheque
After a cheque is endorsed, the payee can immediately deposit it at a bank branch, ATM, or via mobile deposit. However, it can take minutes or a full week for the money transfer to take place.
How long it takes to receive money after endorsing a cheque depends on the amount of the cheque and the institution’s rules on hold times.
Hold times: Canada’s official guidelines state that the first $100 must be made available to you either immediately (for in-person deposits with a teller) or the next business day (via ATM or mobile deposit).
Otherwise, the permissible hold period for cheques extends up to 8 days to give the bank time to verify details and conduct a digital security process.
FAQ
How do I endorse a cheque to someone else in Canada?
To endorse a cheque to someone else in Canada, sign the back of the cheque and write "Pay to the order of [name of person]" followed by their signature. This transfers ownership of the cheque.
Can you deposit someone else's check in your account in Canada?
Yes, you can deposit someone else’s cheque into your account in Canada if you have their endorsement on the back. You may also need to provide written authorization or proof of identity. Check with your bank.
What to write when endorsing a check?
When endorsing a cheque in Canada, sign your name on the back. If you are transferring it to someone else, add "Pay to the order of [person's name]" along with your signature to authorize the transfer.
What happens if you don’t endorse the back of a check?
If you don’t endorse the back of a cheque, the bank may not accept it for deposit or cashing. Endorsement is necessary to authorize the transfer or deposit of funds. It protects your safety and the security of the funds.
Do both people have to be present to endorse a check?
If a cheque is made out to two people with "and" written between their names, then both individuals must endorse it for deposit or cashing. That’s true unless one person has legal authorization to act on behalf of the other.
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