All About Two-Party Checks and How to Cash Them

posted in: Banking Questions, Checking | 0

What is a two-party personal check? A two-party check is a check made out to two names. On the Pay-To-The-Order-Of line, it can be made out to “Person A and Person B” or it could say “Person A or Person B”. Understanding the difference can save you grief.

The words “and” and “or” often creates confusion among people who have a two-party check. However, the differences between the two terms isn’t that hard. For example, if a check says John Hancock “or” Jane Hancock, then either party whose name is on the check can deposit the check into their bank account – be it a single or joint account.

If a personal check, however, is made out to both John Hancock “and” Jane Hancock, depositing the check is a bit more difficult to do. This is especially true if the parties do not share a joint checking account. It gets even more complicated when the other party won’t or can’t sign the check.

On top of that, many banks now require that everybody on the check be present at the bank with a government ID to get signature verification.

However, according to Uniform Commercial Code Section-110(d), a check that’s payable to two or more people is vague on payees. Thus, any person on the check can deposit the check into an individual account rather than a joint account.


Bank Policies Regarding Two-Party Check Cashing

Where can you cash a two-party check? It’s important to learn what your bank’s policies are regarding check deposits with multiple parties.

Banks often weigh the risks in cases where one individual on a multi-person check is attempting to deposit the money into their own account instead of a joint account. One way they mitigate the risk is their requirement that the two payees share a joint account. For married couples, tax refund checks of a joint tax return are made out to both parties. Bank of America applies this policy to tax refunds, but not regular checks. Ally Bank shares a similar policy.

Wells Fargo, Chase, and Walmart require that both payees be present to deposit a check, showing a state ID, driver’s license or other legal government ID that can verify the signatures.

Capital One and Citibank have more relaxed rules. So long as the payees endorse the checks themselves, any party can deposit the check without providing ID or the need of a joint account.


Depositing A Check With Two Names

If you’re unsure if you can deposit a check when there are two names on it, it’s always a good idea to call the bank before heading up there. Never try depositing your two-party check through its ATM in the hopes that the bank accepts it.

When a bank feels a deposit violates a policy, you could spend time clearing up the situation.

The best thing you can do to avoid the headaches of a two-name check is to ask the payer if they’ll write individual checks (i.e., a check for each person). For any government issued check, such as a tax refund, you can ask them to reissue the check for each person.


If the Other Party Cashes Your Two-Party Check

What happens when a person learns that a check written to themselves and another person has been deposited without their approval? These cases are often seen where the checks say “or” instead of “and”.

While the injured party may think going after the bank will resolve their issue, it’s actually not the bank that they should be speaking with. Instead, they will need to talk to the person who initially deposited the check to recover their portion of the funds.

Special Note: It is illegal, even if you have a joint account with someone, to forge their signature on a check and deposit it.

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