Lost Notes - Posted by Sam

Posted by Michael Morrongiello on June 30, 2003 at 15:15:23:

We have purchased numerous deals where the ORIGINAL promissory Note instrument was lost or misplaced. As you may or may not be aware the ORIGINAL Note is THE “negotiable instrument” we are purchasing when we purchase a Note. A photocopy of the Note is NOT a negotiable instrument and cannot be readily tendered or endorsed just like a bank will not provide you with cash for an endorsed copy of a personal check.

Depending on what state the property is located in will dictate a course of action when dealing with a lost Note instrument.

Sometimes a copy of the signed or unsigned Note is recorded along with the Mortgage or Trust Deed instruments. This can be used to create an affidavit with certain recitals, indeminification language, etc. that the Note seller and /or Note payors would execute “Nunc Pro Tunc” (a fancy latin phrase meaning Now as if it were then…)effectively resurrecting the debt…

The real danger is if you have to foreclose and the court asks you to produce “evidence of the debt” which is what the prommissory Note represents. With a lost Note there may be certain holes that can be exploited by an aggreesive Payor who is wanting to delay or derail your ability to collect on the debt.

Some states require a bond be posted for the lost note in the event it were to ever turn up in the future.

As for the lost Deed of Trust - as long as a clerk obtain CERTIFIED COPY Of this recorded instrument can be obtained you are OK with this.

Its the Lost Negotiable instrument (the Note) that will present you with the most problems.

If you feel uncomfortable you can always “broker” the Note and make a little bit of money for your effort and time (Sunvest would have interest in such a transaction).

To your success,
Michael Morrongiello

Lost Notes - Posted by Sam

Posted by Sam on June 26, 2003 at 16:55:03:

I have someone who wants to sell me a note. She has lost the note and deed of trust. What do you do in this case.


Lost Notes no big problem - Posted by John Merchant

Posted by John Merchant on July 07, 2003 at 22:47:46:

M Morrongiello is right, but there might be an easier way: Ask the note payor/debtor to sign an “estoppel” letter, setting out the detailed terms of the note, and the fact that $x is still owed, at x%, and the specific terms of the ntoe.

I’d have your lawyer draft and obtain the signature on this estoppel letter, as he’ll know the right language to use to “bind” the debtor.

Why would the debtor sign such a thing? Well, it’s to his benefit to show that the note is current, and not delinquent, and that you be informed, in writing, by him exactly what he owes you, etc. And you or your lawyer could say to him that you just want to nail it down so you won’t be over-charging him, and can honestly report to the credit bureau, or anbody who inquires, that he is indeed current, good payor, etc.

If he’ll do that, it would then be an easy matter to sue on the note, and you could produce that estoppel letter as your best evidence of the note. It would be admissible without the note itself and that would be all the proof you’d need.

As far as proving to yourself that the D/T is still on the records and is un-released, as security for that note, a title company would issue you a title guarantee/policy stating such, and they’d then be liable to you if it were not true.