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How to Add Signers to Convenience Signer Area

Question: 
We have opened a business account for a Sole Proprietor and the owner wants to add more signers to her account. The New Account Rep choose Authorized signer and had the additional signer to sign in that area along with a bank resolution. The new account reps card was sent back to her and she was told that it was done wrong that she should have only put the owner in the authorized signer area and put the other signers in the Convenience Signer area. Who is right and why?. There is only room for two signers in the convenience signer area.
Answer: 

Answer by Randy Carey: Only your legal counsel should be advising you regarding the use of specific deposit account opening forms based on your contracts and State law.

Answer: 

Answer by John Burnett: The following is not legal advice -- In my experience "convenience" and "authorized" are often considered interchangeable, with "convenience signers" appearing most often on personal accounts and "authorized signers" on non-personal accounts. Some states have specific provisions of law regarding "convenience accounts" or "convenience signers" which, in my experience equate with the concept of "authorized signer." In both cases, the individual in question is an agent of the account owner, and has no ownership interest in the account. The individual's access to the account is on behalf of and at the pleasure of the owner, and can be terminated by the owner by notice to the bank. It ends on the death of the owner (if the owner is a natural person).

The question is compounded by a gray area at some banks on how to treat sole proprietorship accounts. Are they personal or non-personal accounts? Does the institution's platform software force the issue one way or the other for sole proprietorships?Matters may also be muddled by the choice of a business signature card/account agreement for a sole proprietorship on which the signature area is designed more for an entity (with authorized signatures) rather than for an individual owner's signature.

So, getting back to Randy Carey's suggestion -- take your signature card and deposit agreement to legal counsel to figure out how best to proceed. Then get it written down in your procedures manual, because this isn't the last time the bank will be confronted with the question.

First published on BankersOnline.com 8/20/12

First published on 08/20/2012

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