What is the legal term of a Third Party Check?

Question

I went to my credit union to cash my sisters paycheck for her. The teller would not cash it because, it was a "third party check".

Answer 1

a company fills the check out to your freind, that freind signs that check over to you, you take it to the bank to cash. you are the 3rd party.

Answer 2

Third-Party Check


1. Check or Draft payable to someone other than the check writer (the Maker of the instrument) or the person who initially negotiates the check by endorsing the back of the instrument.

2. Check transferred by Endorsement and the words "pay to the order of-." The new holder has the same legal rights as the original endorser, and is free to negotiate the check himself either by endorsing the back of the instrument and depositing it, or by exchanging it for cash at a bank teller. The Uniform Commercial Code allows transfer of a check to a new owner any number of times. In practice, however, multiple endorsed checks are uncommon, and banks may be reluctant to accept them without verifying signatures of endorsers.

3. Payable Through Draft. Credit Union Share Drafts often are paid by a commercial bank, which then debits the credit union's account after paying drafts presented for payment, as are drafts that are written against a money market mutual fund.

Answer 3

Chellstar ... Think about it. Anyone agreeing to safely cash that check under those circumstances would have to:

1 - Verify there's enough money in the check-writer's account.
2 - Verify the signature of the check-writer to make sure it's authentic.
3 - Verify the identity AND the endorsement of the payee, the person indicated where it says "Pay to the Order of." The endorsement is your sister's signature which would appear on the back of the check to indicate her intent to negotiate, cash, or deposit the check.
4 - Make sure the payee (your sister) really intended for you to be authorized to cash it.

If even one of the above items isn't accomplished, the person/bank giving the cash is taking the risk upon themselves.

Make sense?

Answer 4

"third party check" is known as a special endorsement...

when endorsing the check she should sign it and write ‘pay to the order of ‘your name’” .. then you sign it...

Although this is a legal way to sign money over to somebody else, it is often a means of fraud. Most financial institutions only accept them as deposits only and not cash because they take longer to clear...