Person Entitled to Enforce a Note

Three categories

UCC § 3-301 defines a person entitled to enforce an instrument as:

• the holder of the instrument;
• a nonholder in possession of the instrument who has the rights of a holder; or
• a person not in possession of the instrument who is entitled to enforce it under § 3-309 (lost, destroyed or stolen instruments) or § 3-418(d).

A person may be a person entitled to enforce even though the person is not the owner of the instrument or is in wrongful possession of it (UCC § 3-301).

Who is a holder

Under UCC § 1-201(b)(21)(A), a “holder” with respect to a negotiable instrument includes the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.

Lost notes

UCC § 3-309 lets a person not in possession enforce a lost, destroyed or stolen instrument if the person meets the section’s requirements, including proving the terms of the instrument and the right to enforce it. The court may require adequate protection for the person required to pay.

Why it matters in foreclosure

In many states, the party foreclosing on a mortgage must show it is entitled to enforce the note the mortgage secures. How courts apply this — and what proof they require — is governed by each state’s law. See standing.

Researching person entitled to enforce in your state

To research person entitled to enforce for a real matter, start with the primary sources. For example, read the statute, the rule and the documents in your own file. Then look for recent appellate decisions from your state, because they control how local courts read the law. After that, compare what you found with the federal rules that may also apply. Our state procedures guide and the Research Center can help you find and check each source.

Sources and further reading

Official sources used on this page:

• law.cornell.edu
• law.cornell.edu
• law.cornell.edu

Related reading on Lawtopolis:

• Negotiable Instruments (UCC Article 3)
• Standing
• Judicial Foreclosure