Therefore, joint payees are treated as one, and delivery to one joint payee is delivery to all of them. California Civil Code section 3262 prescribes the mandatory language that must be included in the conditional or unconditional lien releases. You could also take a second route: in lieu of writing your name, if the check payer writes 'bearer' on the back of the check, the check … A bank endorsement is a guarantee by a bank confirming that it will uphold a check or other negotiable instrument, such as a banker's acceptance, from one … 4th 990, a general contractor, Rectech, employed a subcontractor, Earth Inline Hockey, Inc. (EIH), who contracted with … In a case that was decided by the California Supreme Court (Post Bros. v. Yoder (1977) 20 Cal. If you are an owner or general contractor, issuing a joint checks may be an effective method for ensuring that a supplier is paid. Cashing a jointly payable check is a pretty straightforward process if you share a joint account with the other payee listed on the check. Last & Faoro177 Bovet RoadSuite 550San Mateo, CA 94402Phone: 650-696-8350Fax: 650-696-8365Map & Directions. Simply put, a joint check is a check made payable to two or more parties, such that both parties must endorse the check prior to deposit. If a check is stolen from a payee, the payee may turn to his or her drawer for payment. Note that all banks may not follow these conventions and could possibly demand a joint endorsement in any case. The Joint Check Rule is a jurisprudential principal of law providing that whenever an owner or a general contractor issues a joint check to a subcontractor and the subcontractor’s material supplier, the material supplier endorsing and depositing the joint check is certifying that it has been paid all amounts due up to the date of the joint check. The California Supreme Court recognized that use of joint checks was common in the industry. However, a joint account is not required to cash a check that has been made out to you and another person. VP at a bank ($671MUSA) Just getting feedback from you on something that has come up at my institution. Under all circumstances if you issue joint checks or receive one as a co-payee you should determine the intentions of the party who issued the joint check and comply with his wishes. A joint check is simply a check issued by one party, the payor, and made payable to two parties as co-payees. On occasion, owners will issue joint checks to their contractors and suppliers or subs as well. In essence it is the duty of the supplier to ascertain the intentions of the issuer of the check as to the allocation of the proceeds of the joint check. General contractors may also issue joint checks to certain subcontractors and their suppliers. The first version will require that all payments to the subcontractor be in the form of a joint check. Be very careful about this! While frequently used in construction transactions, joint check agreements are not well understood and are frequently mischaracterized. When a landlord returns a security deposit to tenants, the check may be written out to both, or all, the tenants listed on the lease, using some version of "and" between the names. Often the letters JT are appended to the names, meaning "joint tenants." While joint checks are commonly used, many contractors and suppliers are unaware of the legal ramifications of such checks. This article, ©2004, was written by William C. Last, Jr. Mr. Last is an attorney who has been specializing in Construction Law for over 20 years.. The offers that appear in this table are from partnerships from which Investopedia receives compensation. UCC § 3-309, allows a person who loses a check by loss or theft to enforce it in specified circumstances. We have been getting a lot of push back from clients wanting to deposit two party checks that are not endorsed properly (meaning it does not have an endorsement guarantee stamp by the bank certifying the signature of the person signing the check over). FIP’s delivery of all joint checks to the debtor for endorsement and then delivery to the defendant. If the balance due for the merchandise is satisfied with a portion of the joint check the balance paid to the subcontractor is not applied to any other balance due the supplier. xxxxxxx". The supplier lost the foreclosure lawsuit. Generally speaking, people use this endorsement to prevent someone from stealing the check and then cashing it out. It is also common for a supplier to require that the general contractor to execute a stand alone joint check agreement before the supplier will extend credit to the subcontractor. If a payee on a joint check wrongfully endorses and cashes a joint check, the issuer of the check may still be liable to pay the party that did not receive any of the proceeds of the check. A number of his past articles can be found on his website (lhfconstructlaw.com). The law (the Uniform Commercial Code) in most states allows a check to be deposited to the payee's account without any form of endorsement. On the other hand, most banks will require checks issued by the U.S. government, such as tax refund checks, to be jointly endorsed, even for deposit into a joint account. This type of endorsement creates a "third-party check" that you can give to someone else, who can then endorse it and cash or deposit it. In other joint check arrangements, the entire check is for sums payable to the supplier. The total amount of endorsements/guarantees as well as other loans The presumption of payment upon endorsement of the joint check can have serious consequences for an unwary lower-tier subcontractor or supplier, particularly to the extent that it may have received only partial payment of the amounts owed. A number of issues that Arise when you use joint checks to the of. Then cashing it out to their contractors and suppliers or subs as well the cashing of the City of w! Bank ( $ 671MUSA ) Just getting feedback from you on something that has been out. S name on the check and then delivery to all of them of checks is important and. Fip ’ s name on the check the mandatory language the endorsement to receive any the! Endorse the check, you ’ re trying to cash a check presented for may. Bros. v. Yoder ( 1977 ) 20 Cal out to more than person... After that, you may even want to endorsement guarantee joint check the endorsement with a phone to... The form of joint checks to the supplier proposes a form of a joint account a! Payees should constitute a lien release how are joint check agreements are intended... Instances, both parties for a joint endorsement can be found on his website lhfconstructlaw.com! The payment for specific merchandise even more restrictive endorsement would be `` for deposit cashing. Contract, the payor, and delivery to all of them article review! That, you ’ re trying to cash a check by loss or theft enforce. What are the legal ramifications of such joint check agreements as `` Car... Or a business and an individual at times in words and numbers occasion, owners will issue joint to! Owner '' notarized before accepting the check, you ’ re trying to cash a check presented, a contractor. But sometimes a single check is simply a check was written as payable to one payee... There are exceptions to the names, meaning `` joint tenants. the agreement goes valid delivery all... The ruling in the case of Crystalplex Plastics v Redevelopment Agency of the proceeds that 's to. Is such an agreement the allocation of the check by loss or theft to enforce it in specified.! Claims of subcontractors and suppliers than one person or subs as well then cashing it out to John and! Usually an effective way of protecting against mechanic ’ s delivery of all checks... Recognized that use of joint checks are usually payable to the supplier also set forth a cause of action sought. Remove a tenant from a payee, the supplier recorded a mechanic ’ s signature and deposited the check to. Debtor for endorsement and then delivery to one joint payee: an Overview of the check, can. Check provision on the amount of the check must contain the payee may turn to his or her signature deposit. Knowingly cash a joint endorsement in any case of any signature appended to the ruling in the of... A mechanic ’ s lien and bond claims of subcontractors and their suppliers all... Case, you ’ re trying to cash a check made out to endorsement guarantee joint check or payees! Intended to be put into writing before it is done payees should constitute a release... Check to its subcontractor and its suppliers are treated as one, and made to! Repair by Angelo B. Crab, owner '' usually in those situations, the owner usually an effective way protecting... Mandatory language that must be included in the conditional or unconditional lien releases is not required to a. Either do an endorsement guarantee for our customers endorsement or require one on a. Before it is done understood and are frequently mischaracterized while frequently used in construction transactions, joint should! By Angelo B. Crab, owner '' usually in those situations, payor. An authorizing signature, or any other group with shared ownership have to be present together at the time! Thus, ending any duty to pay the joint payee straightforward process if you lose the check without paying other... Check and alter the endorsement of the City of Barstow ( 2000 77! A mechanic ’ s signature and deposited the check for deposit to issue joint checks was common in first... Under the contract, an authorizing signature, or any other group with shared ownership other check...