Lost Note Affidavit
A sworn statement used to substitute for a missing original promissory note; it adds risk and can reduce a note's value or complicate a sale.
A lost note affidavit (LNA) is a sworn legal statement attesting that the original promissory note has been lost, destroyed, or misplaced, used to substitute for the missing original when proving the right to enforce or transfer the note. Because a real estate note is a negotiable instrument whose enforcement generally depends on possessing the original properly endorsed document, a missing original is a real problem — and the lost note affidavit is the imperfect fix. For note sellers, understanding the LNA matters because a lost original can reduce price or complicate a sale.
Why the original note is so important
Under the UCC (Article 3), the "person entitled to enforce" a note is usually the holder in possession of the original, properly endorsed instrument. To foreclose, a holder typically must produce that original note. So the original is not just paperwork — it is the key to collecting and, if necessary, foreclosing. This is why the collateral file emphasizes safeguarding the wet-ink original.
What a lost note affidavit does
When the original cannot be found, an LNA:
- States under oath that the note existed, the affiant was entitled to enforce it, and it was lost or destroyed (not transferred to someone else)
- Attaches a copy of the note if available
- Often includes an indemnity — the affiant agrees to protect the buyer/holder against any claim if the original later surfaces in someone else's hands
Many states' versions of UCC § 3-309 allow enforcement of a lost note if the party can prove the terms and their right to enforce, provided the borrower is adequately protected against double liability.
Why an LNA reduces value or complicates a sale
For a note buyer, a lost original raises risk:
- Enforcement risk: A court may scrutinize a lost-note foreclosure more closely, and some borrowers contest it, adding time and cost.
- Double-claim risk: If the original was actually negotiated to another party, that holder could claim the right to enforce — the reason indemnities and careful affidavits exist.
- Marketability: Some buyers discount notes lacking the original; a few decline them. Title companies and closing agents may require additional documentation.
As a result, a note backed only by an LNA typically sells at a somewhat lower price than the identical note with a clean original, and the closing may require extra steps.
How to avoid needing one
The best protection is prevention: keep the original note in a safe place (a fireproof safe or with your servicer/attorney), and never send the only original through the mail uninsured. If you use a servicer, confirm where the original is held.
What it means when you sell
Locate your original promissory note before going to market. If it is genuinely lost, disclose it early — a reputable buyer can often still purchase the note with a properly prepared lost note affidavit and indemnity, but expect more documentation and possibly a modest price adjustment. Providing a clear copy, the recorded security instrument, and the assignment chain helps reconstruct the file. Mortgage Note Capital can work through lost-note situations; the cleaner the supporting documentation, the smaller the impact on your sale.
This is general information, not legal advice; lost-note enforcement rules vary by state.