Cashing a Jointly Payable Check

by Ciaran John

In theory, you can cash a jointly payable check at a bank or check-cashing center. However, a number of factors can affect the negotiability of a check, and you cannot cash an improperly completed check. Certain guiding principles govern check-cashing transactions, although some rules vary between states and from bank to bank.

Payee

Check-cashing laws vary between the states but laws in all 50 states are based on the framework provided by the Uniform Commercial Code. The UCC was developed to create uniformity in interstate transactions, including those involving banks. Under the UCC, a check is jointly payable when the names of two or more people are listed on the payee line. Both parties must be present when cashing the check if the word "and" appears between the names on the payee line. Either payee can cash it without involving the other if the word "or" is listed between the payee's names. If neither "or" nor "and" is written on the check then the check is treated as if the word "or" was present.

Individuals

You can only cash a check payable to an actual person, as opposed to an entity or association. Insurance checks are often made jointly payable to an insured person and a business such as an automobile shop. You can endorse the check over to the business or vice versa. You can then deposit the check into an account but you cannot actually cash such a check. In such instances, you must comply with applicable state laws and bank rules about endorsements.

Procedures

Liability laws vary from state to state but in many instances, account holders can hold businesses liable for cashing fraudulent checks. Consequently, banks and check-cashing firms typically require check payees to present at least one form of government-issued identification. In some instances, both payees may have to provide a thumbprint. In states such as Texas, a bank may charge a check-cashing fee of up to $30 when a non-customer cashes a check. Likewise check-cashing firms charge either flat fees or fees that are based on a percentage of the face value of the check. You and the other payee must decide how to split any such fees.

Considerations

A bank is legally bound to honor a check that is presented for payment by another bank. However, banks are not required to cash checks presented by non-account holders, even if those individuals are willing to pay a fee and provide ID. In recent decades, check fraud has become an increasingly costly problem for banks. It is riskier to cash a jointly payable check than a single payee check since the bank has to establish the identity of both payees and determine whether the account holder even wrote it. Where possible, it makes life simpler if you ask the account holder to write separate checks rather than one joint check.

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