Don't Lose It Over A Lost Promissory Note

A promissory note, in simplest terms, is the acknowledgment of a debt. It is a written promise to repay an amount owed by one party to another and contains the terms of such repayment. While a promissory note is not typically a “negotiable instrument” as defined in the UCC, it is intended to be and is codified as an instrument that can be easily transferred by the lender to a third party. Because of this easy transferability, losing a promissory note can have serious consequences for a lender since the possessor of the document is likely the only party who can enforce it.

In the commercial mortgage-backed securities market, promissory notes are often transferred from originating lenders to secondary buyers, as lenders bundle mortgages together and then sell them as income-producing investments to institutional buyers. In the balance sheet loan market, lenders commonly sell off portions of their loans to co-lenders or participants in order to reduce their risk or