Negotiability of A Note by itself, free from an attached security lien
A negotiable instrument (note or draft) is simply one that a person, called a “holder in due course,” who is not one of the persons who created the instrument originally, may negotiate or transfer to another person without difficulty, and who has the power, also, to enforce the instrument according to its terms. If the instrument is a draft, the holder in due course can present it for payment and expect to be paid. If the instrument is a note, a holder in due course can expect to receive payment when the debt is due. The holder in due course can do these things even when the relationship between the original parties to the instrument would preclude their enforcement of the instrument for payment. The holder in due course is the essence of negotiable instruments. Free alienability of these instruments is their important characteristic, and holders in due course are the agents of free alienability.
How does a person become a holder in due course? He or she does so by taking the instrument in good faith from a prior holder for value without knowledge of any defects in the instrument, of any claims against the instrument, or of any defenses that may be asserted against its payment. The holder in due course, therefore, honestly receives the instrument, has paid for it, and can claim innocence with respect to any transactions which may have involved the instrument prior to its coming into his or her possession. The characteristic of innocence is, perhaps, primary.
Negotiation involves a specific sequence of acts that make up the transfer to a holder, and from one holder to another. There are two elements, depending upon the kind of instrument involved. If the instrument is a bearer instrument, delivery of the instrument from one person to another constitutes negotiation. If the instrument is an order instrument, it is negotiated by indorsement of the instrument by the current payee and physical delivery to another person, who becomes a holder.
Negotiability of an Article 3 note with a lien attached is different even in other states. Carpenter v. Longan still lives?
In a mortgage foreclosure action, a plaintiff has standing where it is the holder or assignee of the underlying note at the time the action is commenced (see Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361 ; U.S. Bank, N.A. v Collymore, 68 AD3d 752, 753-754 ). "Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident" - Wells Fargo Bank, NA v. Charlaff, 134 AD 3d 1099 - NY: Appellate Div., 2nd Dept. 2015
Secured creditor’s perspective;
Some lenders making relatively small commercial real estate loans make a conscious decision not to file financing statements to perfect the personal property collateral granted in their mortgage documents (at least where the financed real property isn’t a hotel, skilled nursing facility, furnished apartment building, or other property with a heavy personal property component). They tend to view the personal property to be of little value or importance to the real property. They don’t view the value of making the initial UCC filing and filing continuation statements as worth the cost on a portfolio-wide basis. They are willing to take the risk of losing the personal property in the rare case where there is a conflicting secured creditor (or a bankruptcy trustee or debtor) that wants to make an issue of the personal property. Lenders taking this approach often believe that, by the time a property is in foreclosure, the personal property needs to be replaced anyway. – [Attorney name withheld], but you can find it….
You do understand
personal property also?
The real property can be sold through the private registry to make up for the
personal property. Hence the importance of registering the
deed of trust into the private registry.
Hence the importance of registering the deed of trust into the private registry.
” that in this case MERS assigned BAC both the note and deed of trust”
How much more proof is needed to show the courts
are either turning a blind eye, or they have got to be the most overpaid
bunch of idiots in
"settled principle that a mortgage securing a negotiable note is but an incident to the note and partakes of its negotiable character."
More importantly; “partakes of its negotiable character”
Private Registry Rules
Private Registry Rules
Arzola v. ACM PROPERTIES, LP,
Thanks to the Texas Legislature, they made it possible to strip the deed of trust away from the paper promissory note and allow a private registry to pass around a deed of trust, instead of the paper promissory note.
MERS members, a private registry, transfer
transferable records, containing digitized images of deed of trusts, or
security instruments to partake in negotiability of the deed of trust
instead of the paper promissory note. So says the
“Because the incidental deed of trust is negotiable like the note it secures, it is an instrument that may be transferred "for the purpose of giving the person receiving delivery the right to enforce the instrument."
Private registry tool of choice
Private registry tool of choice
This is why private registry members rely heavily
upon chapter 51, Texas Property Code for its private transactions, thus
bypassing any other law in
Authority to Enforce the Note
Arzola also seems to contend summary judgment was
improper because the documents provided by BAC to establish its right to
judgment as a matter of law, i.e., documents to validate its right to
foreclose, actually provide conclusive proof that BAC did not have a
right to enforce non-judicial foreclosure. The arguments and authority
used by Arzola seem to suggest he is relying on what the Fifth Circuit
Court of Appeals has recently referred to as the "split-the-note"
Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 254 (5th
Cir. 2013) (applying
First, the Fifth Circuit held that reliance on
cases like Arzola's is misplaced and inapposite because the Court was
Conflict in Texas UETA
Conflict in Texas UETA
Sec. 322.016. TRANSFERABLE RECORDS. (a) In this section, "transferable record" means an electronic record that:
(d) Except as otherwise agreed, a person having control of a
transferable record is the holder, as defined in
Section 1.201, of the transferable record and has the same rights
and defenses as a holder of an equivalent record or writing under the
Uniform Commercial Code, including, if the applicable statutory
requirements under Section 3.302(a), 7.501,
or 9.330 are satisfied, the rights and
defenses of a holder in due course, a holder to which a negotiable
document of title has been duly negotiated, or a purchaser,
respectively. Delivery, possession, and indorsement are not required to
obtain or exercise any of the rights under this subsection.
(d) Except as otherwise agreed, a person having control of a transferable record is the holder, as defined in Section 1.201, of the transferable record and has the same rights and defenses as a holder of an equivalent record or writing under the Uniform Commercial Code, including, if the applicable statutory requirements under Section 3.302(a), 7.501, or 9.330 are satisfied, the rights and defenses of a holder in due course, a holder to which a negotiable document of title has been duly negotiated, or a purchaser, respectively. Delivery, possession, and indorsement are not required to obtain or exercise any of the rights under this subsection.
Sec. 322.003. SCOPE. (a) Except as otherwise provided in Subsection (b), this chapter applies to electronic records and electronic signatures relating to a transaction.
(b) This chapter does not apply to a transaction to the extent it is governed by:
(1) a law governing the creation and execution of wills, codicils, or testamentary trusts; or
Does 322.003 include 1.201? 3.203? 7.501? 9.330? No!
Private registry members run amuck in Texas. Terrorists in its latest fashion.
Save the state of Texas!