assignment without recourse

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What Is Without Recourse?

Understanding recourse, sales without recourse, without recourse in banking, what does it mean to assign without recourse, what does without recourse mean in real estate, how do i endorse a check without recourse.

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Without Recourse: Meaning, Example, Vs. With Recourse

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.

"Without recourse" means that one party cannot obtain a judgment against, or reimbursement from, a defaulting or opposing party in a financial transaction. When the buyer of a promissory note or other negotiable instrument enters into a "no recourse" agreement, they assume the risk of default.

Key Takeaways

Without recourse means that the buyer of a promissory note, or lender, assumes the risk of default.
When a financial instrument contains the words "without recourse," the endorser is released from future claims.
Sales agreements that are made without recourse create a caveat emptor situation.

Financing can be extended with or without recourse . Under financing "with recourse," if the lender cannot collect on their payment from the party ultimately responsible for payment of the financial obligation, the lender can go back to the borrower to seek payment on the amount due. Recourse may allow the lender to seize not only pledged collateral, but also deposit accounts, and sources of income.

Conversely, "without recourse" financing means that the lender takes the risk of non-payment by the obligor . The lender takes these risks directly and cannot seek payment or seize personal assets not specified in the debt contract .

"Without recourse" means without liability . All sales agreements entered into by a buyer and seller contain rights and responsibilities for both parties. A sale without recourse means the buyer accepts all risks associated with the purchase.

This often occurs when items are sold "as is" without any guarantees. The buyer has "no recourse" against the seller if the item does not work as expected and the seller is not obligated to compensate the buyer for any damages, defects, or performance issues.

A sale that is "with recourse" means that the seller bears responsibility for the sold asset if it turns out to be defective or does not perform as expected. The buyer has the right to seek recourse from the seller, who is often obligated to offer a replacement of equal value or provide a refund.

When a financial instrument contains the words "without recourse," the endorser is released from future claims. If a signed check includes "without recourse" the endorser is not subject to liability should the check bounce due to insufficient funds .

For example, assume Alice makes out a check to Bob. The payee, Bob, decides to pay off his debt to Maggie by endorsing the check, which involves writing his name on the back exactly as it appears on the front of the check. Once the back of the check is signed, it becomes negotiable and allows for the transfer of money ordered by the check. In addition, Bob adds “without recourse” on the back of the check. The endorser, Bob, will not assume any responsibility for paying the check if it is returned for insufficient funds. If Alice’s bank refuses to pay Maggie’s bank the check amount due to insufficient funds in Alice’s account, Maggie cannot demand payment from Bob.

A promissory note is a debt instrument , like a mortgage loan, that contains a written promise by the buyer to pay the seller a definite sum of money. If the loan is secured "without recourse," the lender often uses the mortgaged property as collateral. The lender cannot hold the buyer liable, however, will instead recover the collateral.

Without recourse is evident in certificates of deposit (CDs) and securities where the seller is not required to indemnify the investor for any losses suffered, such as those caused by market fluctuations.

Loans are often sold or transferred among lenders. When a loan is assigned to a new lender, neither the borrower nor the new loan holder can hold the first loan originator liable for any loan-related issues.

Without recourse, or non-recourse debt is a type of loan secured by collateral, such as real estate cited on a mortgage loan. If the borrower defaults, the issuer can seize the collateral but cannot seek further compensation from the borrower.

Endorsing a check and adding "without recourse" to the signature means that the endorser assumes no responsibility if the check bounces for insufficient funds.

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without recourse

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A phrase meaning that one party has no legal claim against another party. It is often used in two contexts:

1. In litigation, someone without recourse against another party cannot sue that party, or at least cannot obtain adequate relief even if a lawsuit moves forward. Someone completely without recourse cannot sue anyone for an alleged injury, or else cannot obtain any relief even if lawsuits are filed.

2. In financial transactions, the words "without recourse" disclaim any liability to the subsequent holder of a financial instrument. Thus, endorsing a check and adding "without recourse" to the signature means that the endorser takes no responsibility if the check bounces for insufficient funds. If the bank accepts such a check and deposits the stated amount in the endorser's account, the bank will have no right to withdraw that amount from the endorser's account.

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What Does "Without Recourse" Mean in the Assignment Area of an Auto Contract?

February 20, 2016 — 12:01 pm EST

Written by The Motley Fool ->

It is common practice for lenders to sell their loans after closing on them -- and this is especially true when it comes to mortgages and auto loans. If your loan contract has an "assignment without recourse" clause, it means that this could happen to you.

What an "assignment without recourse" clause means to you, the borrower

Essentially, an assignment clause in your auto loan contract means that you are giving the lender permission to either sell or transfer your loan to another finance company.

Lenders sell loans for a variety of reasons -- for example, many lenders simply act as originators and don't like to hold many outstanding loans on their books. Or if a lender finds itself with too much outstanding auto loan debt, it could decide to sell a portion of its loan portfolio.

Whatever the reason for selling, the "without recourse" part of the clause means that you can no longer hold the initial lender responsible for any errors or other loan-related issues. Upon sale of the loan to a new lender, the borrower's relationship with their original lender is automatically terminated.

The borrower must deal with a new lender for all issues regarding the loan and must make payments to the new lender. The new lender cannot change the loan's terms, such as the interest rate or loan length, but may have different policies in regards to issues like late payments. If your loan does get sold, it's important to thoroughly read any information you receive from the new lender so you're familiar with any changes that may take place.

The bottom line on "without recourse" clauses

If you want an auto loan that will be maintained by a specific lender for the duration of the loan, be sure to thoroughly read your contract (you should be doing this anyway), and make sure there is no "assignment without recourse" clause. If you're not sure if there is or not, this is a question to specifically ask your lender, so you'll know whether or not your loan can be sold without any responsibility remaining on your lender's shoulders.

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No Recourse

Claims Only Available Against Contracting Parties . Claims, obligations, liabilities, or cause of action (whether in contract or by tort, in law or in equity, or granted by statute) emerge outwards of this agreement, may be made only against (and are those solely of) the entities that are expressly identified as parties in the recitals to this agreement (“Contracting Parties”).

Not Liability Count Nonparty Affiliates . No person who is not a Contracting Celebrate, including no limitation some director, officer, company, incorporator, member, partner, manager, stakeholder, affiliate, agent, attorney, other distributor away, furthermore any financial advisor or lender to, any Contracting Party, oder any director, executive, employee, incorporator, member, partner, management, stockholder, affiliate, agent, attorneys, with representative of, and any financial advisor or lender on, whatsoever of the foregoing (“Nonparty Affiliates”), wish have any liability for anywhere expenses arising out of this agreement.

No "Alter-Ego" Claims . To the maximum extent permitted at law, every Contracting Party whereby waives and releases all claims that may otherwise must available to avoid or disregard the entity form of adenine Contracting Party or otherwise impose the liability of a Contracting Party with any Nonparty Collaborate

No Reliance at Non-Party Affiliates . Each Contracting Club disclaims any reliance upon any Nonparty Affiliates with respect to the achievement of this agreement or any representation or warranty made in, in connection with, or as and inducement till save license.

Benefits Only Available Against Contracting Parties . Claims, obligations, liabilities, or causes of work (whether in contractual or in tort, in law or in equity, or grant for statute) arising out of this discussion, may be made only against (and are those only of) the entities that are expressly identified as parties in the recitals to these agreement (“Contracting Parties”).

No Liability Against Nonparty Affiliates . No person who will non a Contracting Party, including without limitation any director, official, employee, incorporator, become, partner, manager, stockholder, affiliate, agent, lawyers, or sales von, and any financial advisor or donor to, any Contracting Company, or any director, officer, employee, incorporator, member, partner, director, stockholder, affiliate, agent, attorney, otherwise representative of, and any financial counsellor or lender to, either of the forward (“Nonparty Affiliates”), will had any liability for any claims arising output out this agreement.

None "Alter-Ego" Claims . To the maximum extent permitted by law, each Contracting Party hereby waives and releases see claims that may otherwise is available toward avoid or disregard the entity form of a Contracting Party other differently impose the liability of ampere Contracting Party on some Nonparty Affiliate

Does Reliance at Non-Party Sister . Each Contracting Parties disclaims any reliance with any Nonparty Affiliates with respect in which performance off this agreement or random representation or warranty made in, in connection include, or as and inducement to this agreement.

All claims, mandates, liabilities, or causes of action (whether the sign either in tort, in law or in equity, or granted by statute) that may be based on, is respect on, arise under, out or by rationale of, be connected with, otherwise relate in any manner to this agreement, or the negotiation, execution, or performance of that agreement (including any representation or warranty made in, in connection are, or for an initiation to, this agreement), maybe be manufactured only against (and are that solely of) the entities that are expressly identified as parties in the preamble to this agreement (“Contracting Parties”).

No Person what is not a Shrink Party, in without check any director, officer, servant, incorporator, member, partner, manager, besitzer, affiliate, agents, attorney, otherwise representative of, and any financial advisor or lender to, any Contracting Company, conversely anywhere director, officer, employee, incorporator, member, partner, manager, stockholder, affiliate, agent, attorney, or representative of, and any financial advisor or lender to, random of an aforementioned (“Nonparty Affiliates”), will have any liability (whether in conclude or in tortious, in law button in equity, alternatively granted by statute) for any claims, causing of action, obligations, or debts arising under, out of, in connection with, or related in whatever manner on this agreement or based on, in respect are, or per grounds by this agreement or its discussion, execution, performance, or breach; and, to an maximum extent permits due ordinance, each Contracting Gang hereby abandoned and releases all such liabilities, claims, causes of action, and responsibilities opposed any such Nonparty Affiliates.

Without limiting the aforementioned, at the highest extent permits by law,

Each Contracting Party hereby waives and releases any also all entitlement, claims, demands, or causes of promotion that can otherwise be present during rights conversely in equity, oder granted by statute, to avoid or disregard the entity form of a Contracting Party with otherwise impose liability a a Contracting Party on any Nonparty Affiliate, whether granted from statute or based switch theories of equity, agency, control, instrumentality, alter ego, domination, sham, single business undertaking, piercing the veil, inequitable, undercapitalization, or otherwise; and

Each Agreement Gang disclaims any reliance upon any Nonparty Affiliates includes respect to the service of this agreement or unlimited representation or warranty made in, in connection with, or as an lead to this agreement.

All claims, obligations, liabilities, or causes away action (whether in contract or in tort, inbound law or in equity, or grants per statute) that may be based in, in respect of, arise under, go conversely by reason off, be connected with, or relate in any manner to such agreement, or the negotiation, execution, or performance of this agreement (including any representation or warranty made in, in connectors with, or than somebody inducement to, this agreement), may be made only against (and represent those solely of) the entities that is expressly identified as partying in the preamble to this agreement (“Contracting Parties”). Assignation "Without Recourse"

No Person with is not a Contracting Company, including without limitation any director, officer, employee, incorporator, member, colleague, manager, lagerhalter, affiliate, deputy, attorney, or representative of, and any financial advisor either pawnbroker the, either Contracting Party, or any director, officer, employee, incorporator, member, partner, manager, stockholder, affiliate, agent, attorney, or representative of, and any financial advisor or lender to, whatever of who foregoing (“Nonparty Affiliates”), will have any product (whether in make conversely in tort, are law button in equity, or granted by statute) for any claims, causes of action, obligations, or liabilities arising under, out of, int connection with, or related in any manner to such agreement oder based on, in respect of, or by reason of this agreement or seine negotiation, execution, execution, or breach; and, to the maximum extend permitted by lawyer, each Contracting Party hereby waives and releases all such liabilities, claims, causes on action, and obligations opposing any that Nonparty Affiliates.

Without limit the foregoing, to the maximum extent permitted by law,

Anyone Contracting Party hereby waives and releases all and all rights, claims, demands, or dangers of action that allow otherwise been available at legislative conversely in equity, or granted by statute, to avoid or disregard the entity contact of ampere Contract Party or otherwise impose liability of a Contracting Party on any Nonparty Affiliate, whether granted by statute or founded on theories of fairness, agency, control, instrumentality, edit ego, domination, sham, single business enterprise, punch the veil, unfairness, undercapitalization, conversely otherwise; and Red Flag in Lender Dealer Agreements — And What To Do About Them | Boardman Clark

Each Contracting Party disclaims either reliance upon any Nonparty Affiliates with respect to the performance of this agreement or any representation or guaranty made in, in connection with, button as an indication to this agreement. Except as expressly set forth in Section 6 down, the assignment of the Note, Deed of Treuhandverein and Loan Credentials is done unless recourse in Assignor or any ...

The Institute of International Shipping & Trade Law (IISTL) Blog

Official blog of Swansea University's IISTL, where we keep you up to date with the latest maritime and commercial legal news.

Assignment without recourse and anti-assignment clauses

What happens if you purport to assign a debt for ready cash without recourse, but agree to reimburse the assignee in the event that the assignment turns out to have been invalid? One would have thought that the answer was clear. And indeed it is; but only after oil major BP, with a cool $68 million at stake, chose unsuccessfully to take the matter to the Commercial Court on a pettifogger’s technicality in National Bank of Abu Dhabi PJSC v BP Oil International Ltd [2016] EWHC 2892 (Comm) .

BP sold a parcel of oil on credit to Samir, a Moroccan refiner, and then assigned 95% of the debt to the NBAD for cash. The assignment was explicitly without recourse, but BP warranted that there was no legal impediment to the debt being assigned and agreed that if there was it would reimburse NBAD $68 million-odd. Samir went into insolvency leaving NBAD unpaid. It then transpired that the supposedly assigned debt was indeed unassignable without consent (ironically as a result of a provision in BP’s own boilerplate). NBAD sued BP on its warranty claiming its $68 million. BP argued that nothing was owing because even if the clause made the debt unassignable, the purported assignment had given NBAD rights that were just as good as an assignment, namely an equitable right to any proceeds in BP’s hands.

Carr J had no difficulty in rejecting BP’s argument. The debt was clearly unassignable; BP was in breach of warranty; the clause meant what it said; the amount recoverable under it was not in issue; and the result was therefore clear. The fact that the breach of warranty might be regarded as technical was beside the point.

This seems logical. Essentially what BP were trying to do was to argue that even if they had been in breach of warranty NBAD had suffered no loss as a result of their breach. But while this might have been relevant if NBAD’s claim had been a garden variety claim in damages, it was clearly irrelevant if, as here, the contract itself laid down the measure of recovery. Quite rightly, her Ladyship declined to subvert this result by holding that an express warranty to provide a valid assignment can be satisfied by providing the next best thing, however good a substitute others might think it was.

Note: this particular issue will become moot as regards debts governed by English law as and when the Government overcomes its lethargy and gets around to implementing subordinate legislation under s.1 of the Small Business, Enterprise and Employment Act 2015 (useful details here ) to outlaw blanket anti-assignment clauses of this kind.

Professor Andrew Tettenborn

Professor Andrew Tettenborn joined Swansea Law School and the Institute of International Shipping and Trade Law in 2010 having previously taught at the universities of Exeter (Bracton Professor of Law 1996-2010), Nottingham and Cambridge. Professor Tettenborn is a well-known scholar both in common law and continental jurisdictions. He has held visiting positions at Melbourne University, the University of Connecticut and at Case Law School, Cheveland, Ohio. He is author and co-author of books on torts, damages and maritime law, and of numerous articles and chapters on aspects of common law, commercial law and restitution. View all posts by Professor Andrew Tettenborn

The Franchise & Dealer Law Report

The importance of understanding your indirect financing agreements, paul r. norman | 07.10.19.

Most automobile dealers use indirect financing arrangements when selling or leasing vehicles on credit. Under these arrangements, the Retail Installment Sales Contract or Lease ( RISC ) is initially between the dealer, as creditor or lessor, and the buyer or lessee. The RISC is then assigned to a lender pursuant to the terms of a written agreement between the dealer and the lender. The assignment normally is “ without recourse” (meaning that the lender assumes the risk of nonpayment), unless the dealer breaches one of the warranties of its agreement with the lender . In the event of a warranty breach, the lender has the right to require the dealer to buy back the RISC — whether or not the buyer defaults and whether or not the breach is connected with a default.

The warranties that are contained in RISC agreements vary significantly among lenders. Some agreements expressly prohibit acceptance of credit cards for down payments; others permit it and some are unclear. Some contain an absolute guarantee that all the credit information provided by the buyer is correct, while others require the dealer to warrant only that “ to the best of its knowledge,” the credit information is correct. Some contain a warranty that the buyer signed the agreement at the dealership premises; others do not. Unless the dealer has read and understands its agreements with the lenders to which it assigns RISCs and makes sure that its sales and F&I practices are consistent with them, there is some exposure the dealer will have to buy back RISCs and incur the costs and burdens of attempting to enforce the agreements itself.

Because lenders profit from buying RISCs from dealers, dealers have leverage in negotiating agreements with them. For example, if a dealer’s practice is to accept credit cards for some or all of the down payment under a RISC , but a lender’s standard indirect financing agreement prohibits this practice, the lender may agree to an addendum allowing it, if the dealer asks. However, I fear many dealers simply sign the agreement provided by the lender without knowing that its practices may require it to buy back RISCs in the future.

It is important that dealers fully understand the terms and conditions of master agreements and assignment provisions relating to each of their indirect financing arrangements. Consultation with attorneys familiar with these arrangements can provide dealers valuable insight into potential pitfalls of certain lender-preferred provisions as well as identify opportunities to negotiate terms that better reflect dealerships’ actual business practices.

The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.

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Using Receivables to Generate Cash

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on March 23, 2023

Fact Checked

Why Trust Finance Strategists?

Often in real life, a company's management will decide that it would rather have cash immediately than wait for receivables to be collected.

There are two broad approaches to generating cash from receivables. In one, the receivables are pledged as collateral for a loan.

In the other, the receivables are assigned to another party (a factor ), much in the same sense that other assets are sold.

However, there are characteristics of these assignments that prevent some of them from being exactly like a sale. The illustration below summarizes the four possible methods:

Assignment with recourse (assignor collects)
Assignment with recourse (factor collects)
Assignment without recourse

The use of non-uniform terms in practice makes it even more difficult to understand these practices. The meaning of pledging is generally unambiguous and, therefore, there is no problem.

However, many persons refer to the act of assigning as factoring. Some have even used assignment to refer to situations in which accounts are assigned with recourse while using factoring to refer to situations where there is no recourse.

We have chosen the approach in this category for its descriptiveness, simplicity, and similarity to legal usage.

We encourage the reader to understand the concept of each approach. Then, when these situations are encountered in practice, they will be accounted for according to their nature rather than the terminology used.

This example demonstrates disclosures when receivables are used to generate cash. Consider the following information about the Rath Packing Company's current assets:

NOTE 5: Financing Agreement

All receivables and inventories have been pledged as collateral for borrowings under a financing agreement.

The lender is a commercial finance company; however, two banks participated in the borrowings up to a maximum amount of $4,000,000 until 3 September 2018.

One of the banks has continued to participate up to a maximum amount of $2,000,000 since that date.

The total amount available for borrowing under the agreement varies as determined by the commercial finance company. It amounted to $10,000,000 on 27 September 2018.

Using Receivables to Generate Cash FAQs

What are accounts receivable.

Accounts Receivable (A/R) refers to the outstanding invoices a company has issued to its customers for products or services sold, but which have not yet been paid. This represents the money that a company is owed by its customers for goods or services that have been delivered but not yet paid for.

What are the methods used to generate cash from receivables?

There are four basic methods: (1) pledge accounts receivable as collateral for a loan; (2) assign accounts receivable with recourse, also known as factoring; (3) assign accounts receivable without recourse, and (4) use accounts receivable as collateral for a standby letter of credit.

What are the benefits of using receivables to generate cash?

There are several benefits to using receivables to generate cash. First, it can help improve a company's cash flow situation by increasing the amount of money coming in. Second, it can help a company better manage its working capital, as it can use the cash generated from receivables to pay down other debts or invest in new inventory. Finally, using receivables to generate cash can help a company build stronger relationships with its customers, as they will see that the company is willing to work with them to get paid.

What are the risks associated with using receivables to generate cash?

There are a number of risks associated with using receivables to generate cash. The most obvious risk is that a company may not be able to collect all of the money it is owed. This could significantly reduce or even eliminate the benefits of using receivables to generate cash. Additionally, a company that relies too much on receivables to generate cash may end up taking on too much risk, which could lead to financial problems down the road.

How can I maximize the benefits and minimize the risks of using receivables to generate cash?

There are a few things a company can do to maximize the benefits and minimize the risks of using receivables to generate cash. First, it is important to have a solid understanding of one's customers and their payment habits. This will help a company better assess which receivables are most likely to be paid on time and which ones are more likely to go unpaid. Second, a company should have strong internal controls in place to ensure that all receivables are properly managed and collected. Finally, a company should consider using a third-party service to help manage its receivables and collection efforts. This can take some of the burdens off of the company and help improve its chances of successful collections.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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Part 1: Tell Us More About Yourself

Do you own a business, which activity is most important to you during retirement.

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Assignment Of Loan

Jump to section, what is an assignment of loan.

Under an assignment of loan, a lender (the assignor) assigns its rights relating to a loan agreement to a new lender (the assignee). Only the assignor's rights under the loan agreement are assigned. The assignor will still have to perform any obligations it has under the facility agreement.

The debtor, the recipient of the loan, must be notified when a debt is assigned. When there is an assignment of a loan, a Notice of Assignment (NOA) is sent out to the debtor informing them that a new party is now responsible for collecting any outstanding amount.

Assignment Of Loan Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.14 5 dex1014.htm ASSIGNMENT OF LOAN DOCUMENTS , Viewed October 21, 2021, View Source on SEC .

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Transactional attorney and corporate in house counsel for 15 years. Draft all types of contracts and employment agreements.

Veritas Global Law, PLLC ("Veritas") is a law firm specializing in Life Sciences, Private Equity, M&A, technology transactions and general corporate law. Veritas frequently represents clients seeking cost a cost efficient, on-demand, general counsel in a variety of general corporate law matters, and a range of contracts including NDAs, MSAs, Software as a Service (Saas) agreements. Veritas also represents U.S. and non-U.S. private investment fund GPs and LPs across a broad range of activities with a particular emphasis on private equity, venture capital, secondary funds, distressed funds and funds of funds. Mr. Harris received his LL.M. from the University of California, Berkeley, Boalt Hall School of Law and served as an articles editor of the Berkeley Business Law Journal and was an active member of the Berkeley Center for Law Business and the Economy. Additionally, Mr. Harris also holds a J.D. from Boston College Law School, a M.B.A. from the Boston College Carroll School of Management, a B.A. from Hampton University in Political Science with a minor in Economics and Spanish and a certificate in financial valuation from the University of Oxford, Saïd Business School.

Samantha P.

Samantha earned her J.D. at the University of Hawaii, William S. Richardson School of Law and has been a member of the Hawaii State Bar Association since 2020. Samantha has worked as a Family Law attorney in Hawaii since 2020, and has represented clients on a variety of family law matters including: premarital agreements, pre- and post-judgement custody, parenting time and child support issues, pre- and post-divorce issues, interstate custody, and paternity issues. Samantha is a certified E-RYT 200 yoga instructor, taught yoga classes at the Modern Hotel in Waikiki throughout law school, and continues to teach yoga classes at various yoga studios in Honolulu to this day.

https://www.linkedin.com/in/james-swindle/

Bilingual attorney currently employed as a staff attorney for Legal Services of Alabama. Previous legal background includes clerkship with Judge Dorothea Batiste in the field of Domestic Relations. Legal background also includes being an associate at the prestigious firm of Shelnutt & Varner. I performed criminal defense, family, probate, and personal injury services for the firm.

Matthew grew up in Leawood, Kansas. He graduated from the University of Kansas with a Bachelor of Arts degree in Political Science and Communications in 2016 and from the University of Kansas School of Law in 2019 where he received a Business and Commercial Law Certificate. During his time as an undergraduate, he worked at a consulting firm focused on political campaigns and corporate public relations. In May of 2020, he will receive an MBA with a focus on finance from the University of Kansas Business School. Matthew is interested in several practice areas including business and commercial law, arbitration, and civil litigation. In his free time, Matthew enjoys playing basketball, using his virtual reality headset and listening to audiobooks.

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I am a skilled legal researcher and writer with a background in contract drafting and negotiation as well as litigation. I've served as an arbitrator for the past three years and have presided over nearly 400 binding arbitrations for an online dispute resolution platform. Additionally, I am a content writer and editor for the insurance division of LexisNexis. In my role as a contractor for LexisNexis, I research, draft, and edit high-quality legal reference tools on a variety of insurance topics for use by lawyers and insurance industry professionals.

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assignments basic law

Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

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B8-3-04, Note Endorsement (10/02/2019)

Note endorsement, using an allonge for the endorsement, signature requirements for endorsements.

The originating lender must be the original payee on the note, even when MERS is named as nominee for the beneficiary in the security instrument. The note must be endorsed to each subsequent owner of the mortgage unless one or more of the owners endorsed the note in blank. The last endorsement on the note should be that of the mortgage seller. The mortgage seller must endorse the note in blank and without recourse.

For example:

PAY TO THE ORDER OF WITHOUT RECOURSE LENDER’S NAME (Authorized Signature) NAME OF AUTHORIZED SIGNER TITLE OF AUTHORIZED SIGNER

The endorsement must appear on the note. An allonge may be used for the endorsement as long as the following requirements are met:

The form and content of the allonge used must comply with all applicable state, local, or federal law governing the use of allonges and result in an enforceable and proper endorsement to the note.

The allonge must be permanently affixed to the related note and must clearly identify the note by referencing at least the name of the borrower(s), the date of the note, the amount of the note, and the address of the security property.

The note must clearly reference the attached allonge.

Fannie Mae’s status as a “holder in due course” must not be impaired.

Any subsequent endorsements should be, but are not required to be, placed on the allonge.

The lender must indemnify Fannie Mae (as described in A2-1-03, Indemnification for Losses A2-1-03, Indemnification for Losses ) for any losses incurred by Fannie Mae as a result of the use of an allonge for the note endorsement(s).

The endorsement should be signed only by those persons specifically authorized to execute documents in the lender’s behalf. Signatures must be original, except that Fannie Mae accepts a lender’s facsimile endorsement of notes for those jurisdictions in which the lender has determined that such endorsements are valid and enforceable.

A lender that chooses to use facsimile signatures to endorse notes must warrant that the endorsement is valid and enforceable in the jurisdiction(s) in which the security properties are located and must retain in its corporate records the following specific documentation authorizing the use of facsimile signatures:

legal opinions related to the legality and enforceability of facsimile signatures for each jurisdiction in which the lender uses them;

a resolution from the lender’s board of directors authorizing specific officers by name or title to use facsimile signatures, stating that facsimile signatures are a valid and binding act on the lender’s part, and authorizing the lender’s corporate secretary to certify the validity of the resolution, and the names or titles of the officers authorized to execute documents by using facsimile signatures, and the authenticity of specimen forms of facsimile signatures;

the corporate secretary’s certification of the authenticity and validity of the board of director’s resolution;

a notarized certification of facsimile signature, which includes both the facsimile and the original signatures of the signing officer(s) and each officer’s certification that the facsimile is a true and correct copy of their original signature.

The mortgage seller may not delegate to an attorney-in-fact its authority to execute an endorsement. The endorsement may not be executed by a party using a power of attorney.

The table below provides references to recently issued Announcements that are related to this topic.

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Selling Guide

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(Published: May 01 2024)

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Copyright and Preface
A1-1-01, Application and Approval of Seller/Servicer
A2-1-01, Contractual Obligations for Sellers/Servicers
A2-1-02, Nature of Mortgage Transaction
A2-1-03, Indemnification for Losses
A2-2-01, Representations and Warranties Overview
A2-2-02, Delivery Information and Delivery-Option Specific Representations and Warranties
A2-2-03, Document Warranties
A2-2-04, Limited Waiver and Enforcement Relief of Representations and Warranties
A2-2-05, Invalidation of Limited Waiver of Representations and Warranties
A2-2-06, Representations and Warranties on Property Value
A2-2-07, Life-of-Loan Representations and Warranties
A2-3.1-01, Lender Breach of Contract
A2-3.1-02, Sanctions, Suspensions, and Terminations
A2-3.2-01, Loan Repurchases and Make Whole Payments Requested by Fannie Mae
A2-3.2-02, Enforcement Relief for Breaches of Certain Representations and Warranties Related to Underwriting and Eligibility
A2-3.2-03, Remedies Framework
A2-3.3-01, Compensatory Fees
A2-4.1-01, Establishing Loan Files
A2-4.1-02, Ownership and Retention of Loan Files and Records
A2-4.1-03, Electronic Records, Signatures, and Transactions
A2-4.1-04, Notarization Standards
A2-5-01, Fannie Mae Trade Name and Trademarks
A3-1-01, Fannie Mae’s Technology Products
A3-2-01, Compliance With Laws
A3-2-02, Responsible Lending Practices
A3-3-01, Outsourcing of Mortgage Processing and Third-Party Originations
A3-3-02, Concurrent Servicing Transfers
A3-3-03, Other Servicing Arrangements
A3-3-04, Document Custodians
A3-3-05, Custody of Mortgage Documents
A3-4-01, Confidentiality of Information
A3-4-02, Data Quality and Integrity
A3-4-03, Preventing, Detecting, and Reporting Mortgage Fraud
A3-5-01, Fidelity Bond and Errors and Omissions Coverage Provisions
A3-5-02, Fidelity Bond Policy Requirements
A3-5-03, Errors and Omissions Policy Requirements
A3-5-04, Reporting Fidelity Bond and Errors and Omissions Events
A4-1-01, Maintaining Seller/Servicer Eligibility
A4-1-02, Submission of Financial Statements and Reports
A4-1-03, Report of Changes in the Seller/Servicer’s Organization
A4-1-04, Submission of Irrevocable Limited Powers of Attorney
B1-1-01, Contents of the Application Package
B1-1-02, Blanket Authorization Form
B1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns
B2-1.1-01, Occupancy Types
B2-1.2-01, Loan-to-Value (LTV) Ratios
B2-1.2-02, Combined Loan-to-Value (CLTV) Ratios
B2-1.2-03, Home Equity Combined Loan-to-Value (HCLTV) Ratios
B2-1.2-04, Subordinate Financing
B2-1.3-01, Purchase Transactions
B2-1.3-02, Limited Cash-Out Refinance Transactions
B2-1.3-03, Cash-Out Refinance Transactions
B2-1.3-04, Prohibited Refinancing Practices
B2-1.3-05, Payoff of Installment Land Contract Requirements
B2-1.4-01, Fixed-Rate Loans
B2-1.4-02, Adjustable-Rate Mortgages (ARMs)
B2-1.4-03, Convertible ARMs
B2-1.4-04, Temporary Interest Rate Buydowns
B2-1.5-01, Loan Limits
B2-1.5-02, Loan Eligibility
B2-1.5-03, Legal Requirements
B2-1.5-04, Escrow Accounts
B2-1.5-05, Principal Curtailments
B2-2-01, General Borrower Eligibility Requirements
B2-2-02, Non–U.S. Citizen Borrower Eligibility Requirements
B2-2-03, Multiple Financed Properties for the Same Borrower
B2-2-04, Guarantors, Co-Signers, or Non-Occupant Borrowers on the Subject Transaction
B2-2-05, Inter Vivos Revocable Trusts
B2-2-06, Homeownership Education and Housing Counseling
B2-2-07, First-Generation Homebuyer Loans
B2-3-01, General Property Eligibility
B2-3-02, Special Property Eligibility and Underwriting Considerations: Factory-Built Housing
B2-3-03, Special Property Eligibility and Underwriting Considerations: Leasehold Estates
B2-3-04, Special Property Eligibility Considerations
B2-3-05, Properties Affected by a Disaster
B3-1-01, Comprehensive Risk Assessment
B3-2-01, General Information on DU
B3-2-02, DU Validation Service
B3-2-03, Risk Factors Evaluated by DU
B3-2-04, DU Documentation Requirements
B3-2-05, Approve/Eligible Recommendations
B3-2-06, Approve/Ineligible Recommendations
B3-2-07, Refer with Caution Recommendations
B3-2-08, Out of Scope Recommendations
B3-2-09, Erroneous Credit Report Data
B3-2-10, Accuracy of DU Data, DU Tolerances, and Errors in the Credit Report
B3-2-11, DU Underwriting Findings Report
B3-3.1-01, General Income Information
B3-3.1-02, Standards for Employment Documentation
B3-3.1-03, Base Pay (Salary or Hourly), Bonus, and Overtime Income
B3-3.1-04, Commission Income
B3-3.1-05, Secondary Employment Income (Second Job and Multiple Jobs) and Seasonal Income
B3-3.1-06, Requirements and Uses of IRS IVES Request for Transcript of Tax Return Form 4506-C
B3-3.1-07, Verbal Verification of Employment
B3-3.1-08, Rental Income
B3-3.1-09, Other Sources of Income
B3-3.1-10, Income Calculator
B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower
B3-3.2-02, Business Structures
B3-3.2-03, IRS Forms Quick Reference
B3-3.3-01, General Information on Analyzing Individual Tax Returns
B3-3.3-02, Income Reported on IRS Form 1040
B3-3.3-03, Income or Loss Reported on IRS Form 1040, Schedule C
B3-3.3-04, Income or Loss Reported on IRS Form 1040, Schedule D
B3-3.3-05, Income or Loss Reported on IRS Form 1040, Schedule E
B3-3.3-06, Income or Loss Reported on IRS Form 1040, Schedule F
B3-3.3-07, Income or Loss Reported on IRS Form 1065 or IRS Form 1120S, Schedule K-1
B3-3.4-01, Analyzing Partnership Returns for a Partnership or LLC
B3-3.4-02, Analyzing Returns for an S Corporation
B3-3.4-03, Analyzing Returns for a Corporation
B3-3.4-04, Analyzing Profit and Loss Statements
B3-3.5-01, Income and Employment Documentation for DU
B3-3.5-02, Income from Rental Property in DU
B3-4.1-01, Minimum Reserve Requirements
B3-4.1-02, Interested Party Contributions (IPCs)
B3-4.1-03, Types of Interested Party Contributions (IPCs)
B3-4.1-04, Virtual Currency
B3-4.2-01, Verification of Deposits and Assets
B3-4.2-02, Depository Accounts
B3-4.2-03, Individual Development Accounts
B3-4.2-04, Pooled Savings (Community Savings Funds)
B3-4.2-05, Foreign Assets
B3-4.3-01, Stocks, Stock Options, Bonds, and Mutual Funds
B3-4.3-02, Trust Accounts
B3-4.3-03, Retirement Accounts
B3-4.3-04, Personal Gifts
B3-4.3-05, Gifts of Equity
B3-4.3-06, Grants and Lender Contributions
B3-4.3-07, Disaster Relief Grants or Loans
B3-4.3-08, Employer Assistance
B3-4.3-09, Earnest Money Deposit
B3-4.3-10, Anticipated Sales Proceeds
B3-4.3-11, Trade Equity
B3-4.3-12, Rent Credit for Option to Purchase
B3-4.3-13, Sweat Equity
B3-4.3-14, Bridge/Swing Loans
B3-4.3-15, Borrowed Funds Secured by an Asset
B3-4.3-16, Credit Card Financing and Reward Points
B3-4.3-17, Personal Unsecured Loans
B3-4.3-18, Sale of Personal Assets
B3-4.3-19, Cash Value of Life Insurance
B3-4.3-20, Anticipated Savings and Cash-on-Hand
B3-4.3-21, Borrower's Earned Real Estate Commission
B3-4.4-01, DU Asset Verification
B3-4.4-02, Requirements for Certain Assets in DU
B3-5.1-01, General Requirements for Credit Scores
B3-5.1-02, Determining the Credit Score for a Mortgage Loan
B3-5.2-01, Requirements for Credit Reports
B3-5.2-02, Types of Credit Reports
B3-5.2-03, Accuracy of Credit Information in a Credit Report
B3-5.3-01, Number and Age of Accounts
B3-5.3-02, Payment History
B3-5.3-03, Previous Mortgage Payment History
B3-5.3-04, Inquiries: Recent Attempts to Obtain New Credit
B3-5.3-05, Credit Utilization
B3-5.3-06, Authorized Users of Credit
B3-5.3-07, Significant Derogatory Credit Events — Waiting Periods and Re-establishing Credit
B3-5.3-08, Extenuating Circumstances for Derogatory Credit
B3-5.3-09, DU Credit Report Analysis
B3-5.4-01, Eligibility Requirements for Loans with Nontraditional Credit
B3-5.4-02, Number and Types of Nontraditional Credit References
B3-5.4-03, Documentation and Assessment of a Nontraditional Credit History
B3-6-01, General Information on Liabilities
B3-6-02, Debt-to-Income Ratios
B3-6-03, Monthly Housing Expense for the Subject Property
B3-6-04, Qualifying Payment Requirements
B3-6-05, Monthly Debt Obligations
B3-6-06, Qualifying Impact of Other Real Estate Owned
B3-6-07, Debts Paid Off At or Prior to Closing
B3-6-08, DU: Requirements for Liability Assessment
B4-1.1-01, Definition of Market Value
B4-1.1-02, Lender Responsibilities
B4-1.1-03, Appraiser Selection Criteria
B4-1.1-04, Unacceptable Appraisal Practices
B4-1.1-05, Disclosure of Information to Appraisers
B4-1.1-06, Uniform Appraisal Dataset (UAD) and the Uniform Collateral Data Portal (UCDP)
B4-1.2-01, Appraisal Report Forms and Exhibits
B4-1.2-02, Desktop Appraisals
B4-1.2-03, Hybrid Appraisals
B4-1.2-04, Appraisal Age and Use Requirements
B4-1.2-05, Requirements for Verifying Completion and Postponed Improvements
B4-1.3-01, Review of the Appraisal Report
B4-1.3-02, Subject and Contract Sections of the Appraisal Report
B4-1.3-03, Neighborhood Section of the Appraisal Report
B4-1.3-04, Site Section of the Appraisal Report
B4-1.3-05, Improvements Section of the Appraisal Report
B4-1.3-06, Property Condition and Quality of Construction of the Improvements
B4-1.3-07, Sales Comparison Approach Section of the Appraisal Report
B4-1.3-08, Comparable Sales
B4-1.3-09, Adjustments to Comparable Sales
B4-1.3-10, Cost and Income Approach to Value
B4-1.3-11, Valuation Analysis and Reconciliation
B4-1.3-12, Appraisal Quality Matters
B4-1.4-01, Factory-Built Housing: Manufactured Housing
B4-1.4-02, Factory-Built Housing: Modular, Prefabricated, Panelized, or Sectional Housing
B4-1.4-03, Condo Appraisal Requirements
B4-1.4-04, Co-op Appraisal Requirements
B4-1.4-05, Leasehold Interests Appraisal Requirements
B4-1.4-06, Community Land Trust Appraisal Requirements
B4-1.4-07, Mixed-Use Property Appraisal Requirements
B4-1.4-08, Environmental Hazards Appraisal Requirements
B4-1.4-09, Special Assessment or Community Facilities Districts Appraisal Requirements
B4-1.4-10, Value Acceptance (Appraisal Waiver)
B4-1.4-11, Value Acceptance + Property Data
B4-2.1-01, General Information on Project Standards
B4-2.1-02, Waiver of Project Review
B4-2.1-03, Ineligible Projects
B4-2.1-04, Environmental Hazard Assessments
B4-2.1-05, Unacceptable Environmental Hazards
B4-2.1-06, Remedial Actions for Environmental Hazard Assessments Below Standards
B4-2.2-01, Limited Review Process
B4-2.2-02, Full Review Process
B4-2.2-03, Full Review: Additional Eligibility Requirements for Units in New and Newly Converted Condo Projects
B4-2.2-04, Geographic-Specific Condo Project Considerations
B4-2.2-05, FHA-Approved Condo Review Eligibility
B4-2.2-06, Project Eligibility Review Service (PERS)
B4-2.2-07, Projects with Special Considerations and Project Eligibility Waivers
B4-2.3-01, Eligibility Requirements for Units in PUD Projects
B4-2.3-02, Co-op Project Eligibility
B4-2.3-03, Legal Requirements for Co-op Projects
B4-2.3-04, Loan Eligibility for Co-op Share Loans
B4-2.3-05, Geographic-Specific Co-op Project Considerations
B5-1-01, High-Balance Mortgage Loan Eligibility and Underwriting
B5-1-02, High-Balance Pricing, Mortgage Insurance, Special Feature Codes, and Delivery Limitations
B5-2-01, Manufactured Housing
B5-2-02, Manufactured Housing Loan Eligibility
B5-2-03, Manufactured Housing Underwriting Requirements
B5-2-04, Manufactured Housing Pricing, Mortgage Insurance, and Loan Delivery Requirements
B5-2-05, Manufactured Housing Legal Considerations
B5-3.1-01, Conversion of Construction-to-Permanent Financing: Overview
B5-3.1-02, Conversion of Construction-to-Permanent Financing: Single-Closing Transactions
B5-3.1-03, Conversion of Construction-to-Permanent Financing: Two-Closing Transactions
B5-3.2-01, HomeStyle Renovation Mortgages
B5-3.2-02, HomeStyle Renovation Mortgages: Loan and Borrower Eligibility
B5-3.2-03, HomeStyle Renovation Mortgages: Collateral Considerations
B5-3.2-04, HomeStyle Renovation Mortgages: Costs and Escrow Accounts
B5-3.2-05, HomeStyle Renovation Mortgages: Completion Certification
B5-3.2-06, HomeStyle Renovation: Renovation Contract, Renovation Loan Agreement, and Lien Waiver
B5-3.3-01, HomeStyle Energy for Improvements on Existing Properties
B5-3.4-01, Property Assessed Clean Energy Loans
B5-4.1-01, Texas Section 50(a)(6) Loans
B5-4.1-02, Texas Section 50(a)(6) Loan Eligibility
B5-4.1-03, Texas Section 50(a)(6) Loan Underwriting, Collateral, and Closing Considerations
B5-4.1-04, Texas Section 50(a)(6) Loan Delivery and Servicing Considerations
B5-4.2-01, Native American Conventional Lending Initiative (NACLI)
B5-4.2-02, Disaster-Related Limited Cash-Out Refinance Flexibilities
B5-4.2-03, Loans Secured by HomePath Properties
B5-5.1-01, Community Seconds Loans
B5-5.1-02, Community Seconds Loan Eligibility
B5-5.1-03, Community Seconds: Shared Appreciation Transactions
B5-5.2-01, Loans With Resale Restrictions: General Information
B5-5.2-02, Loans with Resale Restrictions: Eligibility, Collateral and Delivery Requirements
B5-5.3-01, Shared Equity Overview
B5-5.3-02, Shared Equity Transactions: General Requirements
B5-5.3-03, Shared Equity Transactions: Eligibility, Underwriting and Collateral Requirements
B5-5.3-04, Massachusetts Resale Restriction Loan Eligibility Requirements
B5-6-01, HomeReady Mortgage Loan and Borrower Eligibility
B5-6-02, HomeReady Mortgage Underwriting Methods and Requirements
B5-6-03, HomeReady Mortgage Loan Pricing, Mortgage Insurance, and Special Feature Codes
B5-7-01, High LTV Refinance Loan and Borrower Eligibility
B5-7-02, High LTV Refinance Underwriting, Documentation, and Collateral Requirements for the New Loan
B5-7-03, High LTV Refinance Alternative Qualification Path
B5-7-04, High LTV Refinance Representations and Warranties
B5-7-05, High LTV Refinance Pricing, Mortgage Insurance, and Special Feature Codes
B6-1-01, General Government Mortgage Loan Requirements
B6-1-02, Eligible FHA-Insured Mortgage Loans
B6-1-03, Eligible VA-Guaranteed Mortgages
B6-1-04, Eligible HUD-Guaranteed Section 184 Mortgages
B6-1-05, Eligible RD-Guaranteed Mortgages
B7-1-01, Provision of Mortgage Insurance
B7-1-02, Mortgage Insurance Coverage Requirements
B7-1-03, Lender-Purchased Mortgage Insurance
B7-1-04, Financed Borrower-Purchased Mortgage Insurance
B7-1-05, Government Mortgage Loan Guaranty or Insurance
B7-2-01, Provision of Title Insurance
B7-2-02, Title Insurer Requirements
B7-2-03, General Title Insurance Coverage
B7-2-04, Special Title Insurance Coverage Considerations
B7-2-05, Title Exceptions and Impediments
B7-2-06, Attorney Title Opinion Letter Requirements
B7-3-01, General Property Insurance Requirements for All Property Types
B7-3-02, Property Insurance Requirements for One-to Four-Unit Properties
B7-3-03, Master Property Insurance Requirements for Project Developments
B7-3-04, Individual Property Insurance Requirements for a Unit in a Project Development
B7-3-05, Additional Insurance Requirements
B7-3-06, Flood Insurance Requirements for All Property Types
B7-3-07, Evidence of Property Insurance
B7-3-08, Mortgagee Clause, Named Insured, and Notice of Cancellation Requirements
B7-4-01, General Liability Insurance Requirements for Project Developments
B7-4-02, Fidelity/Crime Insurance Requirements for Project Developments
B8-1-01, Publication of Legal Documents
B8-2-01, Security Instruments for Conventional Mortgages
B8-2-02, Special-Purpose Security Instruments
B8-2-03, Signature Requirements for Security Instruments
B8-3-01, Notes for Conventional Mortgages
B8-3-02, Special Note Provisions and Language Requirements
B8-3-03, Signature Requirements for Notes
B8-3-04, Note Endorsement
B8-4-01, Riders and Addenda
B8-5-01, General Information on Special-Purpose Legal Documents
B8-5-02, Inter Vivos Revocable Trust Mortgage Documentation and Signature Requirements
B8-5-03, HomeStyle Renovation Mortgage Documentation Requirements
B8-5-04, Sample Legal Documents
B8-5-05, Requirements for Use of a Power of Attorney
B8-6-01, Authorized Use of Intervening and Blanket Assignments
B8-7-01, Mortgage Electronic Registration Systems (MERS), Inc.
B8-8-01, General Information on eMortgages
B8-8-02, Requirements for Creating, Closing, and Correcting eNotes
C1-1-01, Execution Options
C1-2-01, General Information on Delivering Loan Data and Documents
C1-2-02, Loan Data and Documentation Delivery Requirements
C1-2-03, Ownership of Mortgage Loans Prior to Purchase or Securitization and Third-Party Security Interests
C1-2-04, Delivering eMortgages to Fannie Mae
C1-2-05, Bailee Letters
C1-3-01, General Information on Remittance Types
C2-1.1-01, Mandatory Commitment Process
C2-1.1-02, General Information about Mandatory Commitment Pricing and Fees
C2-1.1-03, Mandatory Commitment Terms, Amounts, Periods and Other Requirements
C2-1.1-04, Mandatory Commitment Extensions and Pair-Offs
C2-1.1-05, Servicing Fees
C2-1.1-06, Accrued Interest Payments for Regularly Amortizing Mortgages
C2-1.1-07, Standard ARM and Converted ARM Resale Commitments
C2-1.2-01, Best Efforts Commitment Process
C2-1.2-02, Best Efforts Commitment Pricing, Periods, and Fees
C2-1.2-03, Best Efforts Commitment Terms, Amounts, and Other Requirements
C2-1.3-01, Servicing Marketplace
C2-2-01, General Requirements for Good Delivery of Whole Loans
C2-2-02, Documentation Requirements for Whole Loan Deliveries
C2-2-03, General Information on Whole Loan Purchasing Policies
C2-2-04, Timing of Distribution of Whole Loan Purchase Proceeds
C2-2-05, Whole Loan Purchasing Process
C2-2-06, Authorization to Transfer Funds
C2-2-07, Purchase Payee Codes
C3-1-01, General Information About Fannie Mae’s MBS Program
C3-1-02, Preparing to Pool Loans into MBS
C3-2-01, Determining Eligibility for Loans Pooled into MBS
C3-2-02, Selecting a Servicing Option
C3-2-03, MBS Remittance Type and Selecting a Remittance Cycle
C3-2-04, Mandatory MBS Commitments
C3-3-01, Determining and Remitting Guaranty Fees
C3-3-02, Accessing Buyup and Buydown Ratios and Calculating Payments or Charges
C3-3-03, Buying Up and Buying Down the Guaranty Fee for MBS
C3-4-01, Term-Related Fixed-Rate Mortgage Pooling Parameters
C3-5-01, Creating Weighted-Average ARM MBS
C3-5-02, Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Fixed MBS Margin
C3-5-03, Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Weighted-Average MBS Margin
C3-5-04, Pooling ARMs with a Conversion Option
C3-5-05, Commingling ARMs in MBS
C3-6-01, Parameters for Pooling Loans Into Fannie Majors
C3-7-01, Establishing an MBS Trading Account
C3-7-02, Initiating an MBS Sale
C3-7-03, Making Good Delivery
C3-7-04, Delivering MBS Pool Data and Documents
C3-7-05, Confirming Presettlement Information
C3-7-06, Settling the Trade
C3-7-07, Sale of Fannie Mae Securities to Third Parties
D1-1-01, Lender Quality Control Programs, Plans, and Processes
D1-1-02, Lender Quality Control Staffing and Outsourcing of the Quality Control Process
D1-2-01, Lender Prefunding Quality Control Review Process
D1-3-01, Lender Post-Closing Quality Control Review Process
D1-3-02, Lender Post-Closing Quality Control Review of Approval Conditions, Underwriting Decisions, and Documentation
D1-3-03, Lender Post-Closing Quality Control Review of Data Integrity
D1-3-04, Lender Post-Closing Quality Control Review of Appraisers, Appraisals, Property Data Collectors, and Property Data Collection
D1-3-05, Lender Post-Closing Quality Control Review of Closing Documents
D1-3-06, Lender Post-Closing Quality Control Reporting, Record Retention, and Audit
D2-1-01, General Information on Fannie Mae QC Reviews
D2-1-02, Fannie Mae QC File Request and Submission Requirements
D2-1-03, Outcomes of Fannie Mae QC Reviews
D2-1-04, Identifying and Remedying Origination Defects Under the Remedies Framework
E-1-01, References to Fannie Mae's Website
E-1-02, List of Contacts
E-1-03, List of Lender Contracts
E-2-01, Required Custodial Documents
E-2-02, Suggested Format for Phase I Environmental Hazard Assessments
E-2-03, Revocable Trust Rider (Sample Language)
E-2-04, Signature Requirements for Mortgages to Inter Vivos Revocable Trusts
E-2-05, Servicing Marketplace — Mortgage Loan Servicing Purchase and Sale Agreement
E-2-06, Correcting Errors in eNotes
E-2-07, Description of eNote Header, Footer, and eNote Clause
E-3-01, Acronyms and Glossary of Defined Terms: A
E-3-02, Acronyms and Glossary of Defined Terms: B
E-3-03, Acronyms and Glossary of Defined Terms: C
E-3-04, Acronyms and Glossary of Defined Terms: D
E-3-05, Acronyms and Glossary of Defined Terms: E
E-3-06, Acronyms and Glossary of Defined Terms: F
E-3-07, Acronyms and Glossary of Defined Terms: G
E-3-08, Acronyms and Glossary of Defined Terms: H
E-3-09, Acronyms and Glossary of Defined Terms: I
E-3-10, Acronyms and Glossary of Defined Terms: J
E-3-11, Acronyms and Glossary of Defined Terms: K
E-3-12, Acronyms and Glossary of Defined Terms: L
E-3-13, Acronyms and Glossary of Defined Terms: M
E-3-14, Acronyms and Glossary of Defined Terms: N
E-3-15, Acronyms and Glossary of Defined Terms: O
E-3-16, Acronyms and Glossary of Defined Terms: P
E-3-17, Acronyms and Glossary of Defined Terms: Q
E-3-18, Acronyms and Glossary of Defined Terms: R
E-3-19, Acronyms and Glossary of Defined Terms: S
E-3-20, Acronyms and Glossary of Defined Terms: T
E-3-21, Acronyms and Glossary of Defined Terms: U
E-3-22, Acronyms and Glossary of Defined Terms: V
E-3-23, Acronyms and Glossary of Defined Terms: W
E-3-24, Acronyms and Glossary of Defined Terms: X
E-3-25, Acronyms and Glossary of Defined Terms: Y
E-3-26, Acronyms and Glossary of Defined Terms: Z

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Factoring (IFRS 9)

Last updated: 5 October 2023

Factoring is a financial transaction where a business sells its outstanding accounts receivable to a third party, known as a factor, at a discounted price rather than waiting to be paid based on the original terms. There are two primary types of factoring:

Recourse factoring : Should the original customer (debtor) fail to settle the invoice, the responsibility remains with the seller. In such cases, the factor can seek ‘recourse’ from the seller to recover the unpaid amount.
Non-recourse factoring : Here, the factor takes on the risk of non-payment. If the debtor doesn’t pay, the factor absorbs the loss.

Interestingly, though factoring of receivables is the predominant transaction among non-financial entities necessitating assessment per the IFRS 9 derecognition criteria , IFRS 9 doesn’t provide any examples that directly mention factoring.

Example: Factoring with partial recourse that qualifies for derecognition

Entity A agrees to a factoring arrangement, selling its portfolio of trade receivables to the Factor. The face value and carrying amount of these receivables stand at $1 million, with the selling price at $0.9 million. After the transaction, Entity A absorbs the first 1.8% of credit losses across the portfolio, with the Factor covering the remainder. Historically, the average credit loss for similar receivables is 2%, with a standard deviation of 0.2%.

Initially, Entity A determines it has transferred its rights to receive cash flows as per IFRS 9.3.2.4(a). Subsequently, it evaluates whether it has transferred substantially all risks and rewards under IFRS 9.3.2.6(a). In this assessment, Entity A computes expected variability before and after the transfer. This is done by simulating different credit loss scenarios, assigning probabilities based on prior events, current conditions and economic forecasts. For simplicity, we’re excluding discounting in this example. All the computations from this example can be downloaded in an Excel file .

Variability before the transfer:

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Variability after the transfer (credit loss absorbed up to 1.8%):

From the data, out of an original variability of $1,731, Entity A has transferred $1,636 (95%) and retained $95 (5%). Thus, Entity A determines that it has transferred substantially all of its exposure to the variability in the net cash flow amounts and timings (notably, IFRS 9 doesn’t set a specific percentage threshold). Therefore, substantially all risks and rewards have been transferred, leading to the derecognition of trade receivables.

As a result, Entity A derecognises the trade receivables and recognises a one-time derecognition loss in profit or loss as per IFRS 9.3.2.12. Moreover, Entity A must account for the retained credit risk as a liability under IFRS 9.3.2.6(a). The accounting entries made by Entity A are:

IFRS 9 doesn’t specify where in the P/L the derecognition gain or loss should be presented.

See other pages relating to financial instruments:

The information provided on this website is for general information and educational purposes only and should not be used as a substitute for professional advice. Use at your own risk. Excerpts from IFRS Standards come from the Official Journal of the European Union (© European Union, https://eur-lex.europa.eu). You can access full versions of IFRS Standards at shop.ifrs.org. IFRScommunity.com is an independent website and it is not affiliated with, endorsed by, or in any other way associated with the IFRS Foundation. For official information concerning IFRS Standards, visit IFRS.org.

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Home > Accounts Receivable > Assignment of Accounts Receivable Journal Entries

Assignment of Accounts Receivable Journal Entries

The assignment of accounts receivable journal entries below act as a quick reference, and set out the most commonly encountered situations when dealing with the double entry posting of accounts receivable assignment.

The assignment of accounts receivable journal entries are based on the following information:

Accounts receivable 50,000 on 45 days terms
Assignment fee of 1% (500)
Initial advance of 80% (40,000)
Cash received from customers 6,000
Interest on advances at 9%, outstanding on average for 40 days (40,000 x 9% x 40 / 365 = 395)

About the Author

Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.

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Knowledge Point

What is recourse and nonrecourse lease assignment?

The right of an assignee or buyer in a financial transaction to demand performance from the transaction assignor or seller in the event of default on the underlying debt is recourse . Where a financial transaction is nonrecourse , its assignor or seller is not held liable for payment and performance in the event of default on the underlying debt.

Lease assignments may be with recourse, without recourse or with limited recourse of the assignees (funders) to the lessor in the event of lessee default on the assigned leases :

Recourse assignment – The assignor is held liable to provide the assignee payment and performance of the underlying debt or to repurchase the assigned rights from the assignee upon occurrence of an event of default under the transaction;
Limited recourse assignment – The assignor is liable to the assignee only for a portion of the remaining obligations of the underlying debt upon occurrence of an event of default under the lease, where the recourse amount normally decreases and eventually ceases after a certain period of time;
Nonrecourse assignment – The assignor bears no liability toward the assignee for payment and performance of the underlying debt in the event of default on the transaction, where most lease assignments provide the assignees no recourse to the lease assignor.

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Without Recourse: Meaning, Example, Vs. With Recourse
Without recourse is a phrase that has several meanings. In a general sense, without recourse pertains to when the buyer of a promissory note or other negotiable instrument assumes the risk of ...
What Does "Without Recourse" Mean in the Assignment Area of an Auto
An "assignment without recourse" clause is not uncommon in auto loans and gives your lender the power to sell your loan. It is common practice for lenders to sell their loans after closing on them ...
Without Recourse: Definition, Applications, and Real-Life Scenarios
Sales without recourse. In sales agreements, "without recourse" translates to "without liability.". Buyers accepting this arrangement take on all associated risks. This commonly occurs in "as-is" sales where the buyer has no recourse if the purchased item has defects or fails to meet expectations. In contrast, "with recourse ...
without recourse
without recourse. A phrase meaning that one party has no legal claim against another party. It is often used in two contexts: 1. In litigation, someone without recourse against another party cannot sue that party, or at least cannot obtain adequate relief even if a lawsuit moves forward. Someone completely without recourse cannot sue anyone for ...
Factor Accounts Receivable
The factor does not have to return any cash in excess of the amount advanced or any uncollected accounts. In effect, assignment without recourse is the same as an outright sale of the receivables. Accounting for this transaction is si mple because it is the same as the sale of any other asset. The holder records a loss for the difference ...
What is a recourse, limited recourse and nonrecourse assignment
Recourse assignment - The assignor is held liable to provide the assignee payment and performance of the underlying debt or to repurchase the assigned rights from the assignee upon occurrence of an event of default under the transaction; Limited recourse assignment - The assignor is liable to the assignee only for a portion of the remaining ...
What Does "Without Recourse" Mean in the Assignment Area of an ...
What an "assignment without recourse" clause means to you, the borrower. Essentially, an assignment clause in your auto loan contract means that you are giving the lender permission to either sell ...
No Recourse
No Recourse. Each Contracting Party hereby waives and releases any also all entitlement, claims, demands, or causes of promotion that can otherwise be present during rights conversely in equity, oder granted by statute, to avoid or disregard the entity form of a Contracting Party with otherwise impose liability a a Contracting Party on any ...
Credit assignment without and with recourse
The assignment of credit, in turn, can be with or without recourse. Non-recourse: in this case the assignor guarantees only the existence of the credit and not the solvency of the debtor. With recourse: in this case the assignor is responsible for payment, so much so that he must take responsibility for it in the event of default by the debtor.
Assignment without recourse and anti-assignment clauses
The assignment was explicitly without recourse, but BP warranted that there was no legal impediment to the debt being assigned and agreed that if there was it would reimburse NBAD $68 million-odd. Samir went into insolvency leaving NBAD unpaid. It then transpired that the supposedly assigned debt was indeed unassignable without consent ...
Boardman Clark
The assignment normally is " without recourse" (meaning that the lender assumes the risk of nonpayment), unless the dealer breaches one of the warranties of its agreement with the lender. In the event of a warranty breach, the lender has the right to require the dealer to buy back the RISC — whether or not the buyer defaults and whether ...
Using Receivables to Generate Cash
Assignment without recourse; The use of non-uniform terms in practice makes it even more difficult to understand these practices. The meaning of pledging is generally unambiguous and, therefore, there is no problem. However, many persons refer to the act of assigning as factoring.
Assignment Of Loan: Definition & Sample
A. Assignor is the legal and equitable owner and holder of that certain Promissory Note in the principal amount of $13,800,000.00 dated June 1, 2007 (the " Note "), which Note is secured by, among other things, that certain Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing dated June 1, 2007, executed by ...
ASSIGNMENT WITHOUT RECOURSE Sample Clauses
ASSIGNMENT WITHOUT RECOURSE. The assignment of the Contract shall be without recourse, except as otherwise provided by the terms of this Agreement and the terms of the "Assignment Without Recourse" provision on the reverse side of a Contract. Sample 1. ASSIGNMENT WITHOUT RECOURSE. The Parties agree that the transfer of Assigned Receivables to ...
Assignments: The Basic Law
Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court, 35 Cal. 2d 109, 113-114 (Cal. 1950). An assignment will generally be permitted under the law unless there is an express prohibition against assignment ...
WITHOUT RECOURSE Sample Clauses
Sample 1. WITHOUT RECOURSE. This Sale Assignment is made without recourse but on the terms and subject to the conditions set forth in the Agreement. The Seller acknowledges and agrees that the Buyer is accepting this Sale Assignment in reliance on the representations, warranties and covenants of the Seller contained in the Agreement. Sample 1.
Note Endorsement
The mortgage seller must endorse the note in blank and without recourse. For example: PAY TO THE ORDER OF WITHOUT RECOURSE LENDER'S NAME (Authorized Signature) NAME OF AUTHORIZED SIGNER TITLE OF AUTHORIZED SIGNER. Using an Allonge for the Endorsement. The endorsement must appear on the note. An allonge may be used for the endorsement as long ...
Assignment "Without Recourse" on JSTOR
The Virginia Law Register Vol. 4, No. 6, Oct., 1918 Assignment "Without Recourse" This is the metadata section. Skip to content viewer section. Journal Article. OPEN ACCESS. Assignment "Without Recourse" George Bryan. The Virginia Law Register, New Series, Vol. 4, No. 6 (Oct., 1918), pp. 401-408 (8 pages)
Factoring (IFRS 9)
Non-recourse factoring: Here, the factor takes on the risk of non-payment. If the debtor doesn't pay, the factor absorbs the loss. Interestingly, though factoring of receivables is the predominant transaction among non-financial entities necessitating assessment per the IFRS 9 derecognition criteria, IFRS 9 doesn't provide any examples that ...
Assignment of Accounts Receivable Journal Entries
The assignment of accounts receivable journal entries are based on the following information: Accounts receivable 50,000 on 45 days terms. Assignment fee of 1% (500) Initial advance of 80% (40,000) Cash received from customers 6,000. Interest on advances at 9%, outstanding on average for 40 days (40,000 x 9% x 40 / 365 = 395)
Agreement Regarding Assignment Without Recourse of Certain Loan Documents
ASSIGNMENT WITHOUT RECOURSE OF . CERTAIN LOAN DOCUMENTS . This AGREEMENT REGARDING ASSIGNMENT WITHOUT RECOURSE OF CERTAIN LOAN DOCUMENTS (the "Agreement") is made as of September 10, 2010 ("Effective Date") by and between HERITAGE BANK OF COMMERCE ("Assignor") and KBS SOR DEBT HOLDINGS II LLC, a Delaware limited liability company ...
What is recourse and nonrecourse lease assignment?
Lease assignments may be with recourse, without recourse or with limited recourse of the assignees (funders) to the lessor in the event of lessee default on the assigned leases: Recourse assignment - The assignor is held liable to provide the assignee payment and performance of the underlying debt or to repurchase the assigned rights from the ...
Federal Register, Volume 89 Issue 98 (Monday, May 20, 2024)
Using a real discount rate of 9.6 percent, DOE estimates that the INPV for manufacturers of circulator pumps in the case without new standards is $347.1 million in 2022$. Under the adopted standards, DOE estimates the change in INPV to range from -19.9 percent to 3.2 percent, which is approximately -$69.2 million to $11.1 million.

What Is Without Recourse?

Without Recourse: Meaning, Example, Vs. With Recourse

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Factoring (IFRS 9)