Allonge to Mortgage Note
(Commercial) (OH)
Summary
This template is an allonge to promissory note and may be used by an existing Ohio lender to indorse and transfer a commercial promissory note to a new lender. This template includes practical guidance and drafting notes. Promissory notes are negotiable instruments under the Ohio Uniform Commercial Code. See ORC Ann. 1303.03. An allonge stating "pay to the order of" should be attached to a promissory note in order to transfer it to a new holder. The transfer and negotiation provisions are set forth in the state's Uniform Commercial Code. See ORC Ann. 1301.01, et. seq., and see United States Bank Nat'l Ass'n v. Mitchell, 2012-Ohio-3732, 2012 Ohio App. LEXIS 3301. In HSBC Bank USA, N.A. v. Thompson, 2d Dist. Montgomery No. 23761, 2010-Ohio-4158, ΒΆ 64-65, the Second District Court of Appeals noted that Ohio has adopted revisions to the UCC that changed "firmly affixed" to simply "affixed," and that R.C. 1303.24(A)(2) "requires that a paper be affixed to an instrument in order for a signature to be considered part of the instrument." Counsel should ensure that an allonge is affixed to the promissory note. For the purpose of determining whether a signature is made on an instrument, a paper affixed to the instrument is a part of the instrument. There is no additional requirement of "permanency" however, best practice would be to staple the allonge to the promissory note to avoid it becoming unattached. See Christiana Tr. v. Barth, 2017-Ohio-6924 (Ct. App.). Ohio law assumes that both the note and mortgage securing the note are transferred together, absent clear evidence to the contrary. See Fed. Home Loan Mortg. Corp. v. Koch, 2013-Ohio-4423, 2013 Ohio App. LEXIS 4660. To transfer the real property collateral securing the assigned note, an assignment of the mortgage must be recorded in the county records where the property is located. For a template of an Ohio assignment of mortgage, see Assignment of Mortgage (Commercial) (OH). For additional templates and guidance on Ohio acquisition financing transactions, see Commercial Real Estate Acquisition Loan Resource Kit (OH). For a template of an Ohio promissory note, see Promissory Note (Acquisition Loan) (Pro-Lender) (OH). For further information on promissory notes, see Promissory Notes (Acquisition Loan).