Allonge to Promissory Note
(NY)

Summary

This allonge to promissory note may be used by an existing New York lender to indorse and transfer a promissory note to a new lender. This template includes practical guidance and drafting notes. If more than one note is being indorsed and transferred, the existing lender can prepare a Schedule A that lists all of the notes being individually indorsed and collectively transferred for consolidation into a single loan. The New York Uniform Commercial Code governs the transfer of negotiable instruments. See N.Y. U.C.C. Law § 3-104 (Consol.) et seq. Because New York State mortgage recording tax is payable only on new debt, the existing lender in a loan transaction often assigns the existing note(s) and mortgage(s) to a new lender. In the case of a note assignment that results in a loan of additional money, the borrower and the new lender then execute a consolidated note and a consolidation, extension, and modification agreement consolidating the existing note(s) and existing mortgage(s) with a "gap" note that reflects the new money and a related "gap" mortgage to form and secure a single consolidated loan. The allonge is affixed to the existing promissory note to document its transfer and to include any necessary language or signatures without adding them to the note itself, which often lacks sufficient space. The key provision in the allonge to the promissory note is the transfer language. For a templates of promissory notes for New York, see Promissory Note (Acquisition Loan) (Pro-Lender) (NY) and Gap Promissory Note (NY). For more information on consolidating notes and mortgages in New York, see Mortgage Consolidations: Minimizing Mortgage Taxes (NY). For a full listing of content relating to promissory notes for use in various practice areas, see Promissory Notes Resource Kit (Small to Mid-Sized Law).