Assignment Of Note And Deed Of Trust Template for England and Wales

In England and Wales, the nearest equivalent involves assigning both a promissory note (an instrument recording a debt obligation) and the benefit of a legal charge or mortgage securing that debt. The assignee steps into the lender's position, acquiring the right to enforce the debt and call on the security. This is common in commercial loan book sales and debt portfolio transfers.

The benefit of a legal charge over registered land is assigned by deed in writing, with the assignment noted on the charges register at HM Land Registry. Written notice must also be given to the borrower under s.136 LPA 1925 to perfect the legal assignment. Without registration and notice, the assignment operates only in equity and may be defeated by a subsequent legal assignee without notice.

Under English law, the lender can generally assign the benefit of a mortgage without the borrower's consent, provided this is permitted under the mortgage terms. The borrower must, however, receive written notice of the assignment. Once notice is given, the borrower must make payments to the new assignee. Residential mortgage assignments are also subject to FCA regulatory requirements.

Assigning the benefit of a regulated residential mortgage under the Financial Services and Markets Act 2000 brings the assignee into contact with regulated mortgage activities. If the assignee intends to administer the mortgage (for example, by communicating with the borrower or varying the terms), they are likely to require FCA authorisation as a mortgage administrator or must appoint an authorised firm to act.

The borrower retains all contractual and statutory rights against the assignee that they had against the original lender. They can raise any defence or set-off available at the time of notice of the assignment. The assignee cannot impose worse terms than those in the original mortgage without agreement. FCA rules on treating customers fairly also apply to regulated mortgage contracts.

Commercial loan assignments are less heavily regulated. No FCA authorisation is required simply to hold and enforce a commercial loan. However, the assignment deed must still comply with LPA 1925 formalities, notice must be given to the borrower, and the charge must be noted on the Land Registry title. Parties often use a deed of assignment and a deed of novation together for complex structures.

The assignee should review the original loan agreement and charge documents for any restrictions on transfer, check the Land Registry title for priority of the charge, verify the outstanding loan balance and any arrears, confirm no insolvency proceedings are in progress against the borrower, and assess whether FCA authorisation is required. A title insurance policy may also be appropriate for portfolio acquisitions.

An action to recover a mortgage debt secured by deed has a twelve-year limitation period under s.20 of the Limitation Act 1980, running from when the right to receive the money accrued. However, the limitation period for the underlying debt in a simple contract is six years. The assignee inherits the same limitation periods as the original lender; the clock does not restart on assignment.