It happens more than you'd think. The note got lost in a move. It was in a parent's files and never turned up. Or it was mailed and never arrived.
The good news: a lost note can often still be sold.
Short version: You'll likely sign a lost note affidavit. It's a sworn statement that you own the note, it's lost, and you didn't sell it to anyone else. Many buyers will still buy. The price may be a bit lower, and the paperwork takes a little longer.
Why the original note matters
The promissory note is the payer's promise to pay. In most states, whoever holds the original, signed note has the right to collect. That's why buyers want it.
The mortgage or deed of trust is different. It's recorded at the county, so you can always get a copy. The note usually isn't recorded. That makes the original note the one paper that's hard to replace.
Search one more time first
Before anything else, look again in these places:
- A safe or fireproof box
- A safe deposit box at your bank
- The closing file from the title company or attorney
- A parent's or spouse's files, if the note was inherited
- An old servicer, if anyone ever serviced the loan
Call the title company that closed your sale. Many keep copies. Some still have the original if it was never picked up.
What a lost note affidavit is
If the note is truly gone, you sign a lost note affidavit. It's a sworn statement, signed in front of a notary. It usually says:
- You own the note and are entitled to collect
- How and when it was lost, as best you know
- You didn't sell, pledge, or assign it to anyone
- A copy of the note, if you have one, is a true copy
- You'll protect the buyer if the original shows up in someone else's hands
That last point is called an indemnity. It means you agree to cover the buyer if someone else ever claims the note.
Most states follow a rule from the Uniform Commercial Code, Section 3-309. It lets the owner of a lost note still enforce it, if they can prove the terms and that they owned it. A court can require protection for the payer too. That's why the indemnity matters.
How a lost note affects your price
A lost note adds some risk for the buyer. If they ever have to foreclose, proving the note takes more work. Some buyers won't touch it. Others, like me, will look at it if the rest of the deal is solid.
Expect a modest discount compared with the same note with the original in hand. Here's what helps:
- A clear copy of the signed note. This helps the most.
- A recorded mortgage or deed of trust that matches the note's terms.
- A long, clean payment history. It shows the payer knows what they owe and pays it.
- A payer who will confirm the balance. A signed estoppel letter from the payer helps a lot.
Land contracts are different
On a land contract, there's usually no separate note. The contract itself is the promise to pay and the security. If a memorandum or the full contract was recorded, a lost original is usually a smaller problem.
What to do next
- Search for the original in the places above.
- Gather copies of the note, mortgage, closing papers, and payment records.
- Get a quote and tell the buyer up front that the original is lost. Start here.
- Sign the lost note affidavit the buyer or title company prepares, in front of a notary.
I'm not a lawyer. If there's a dispute over who owns the note, talk with a real estate attorney first.
Frequently asked questions
Can I sell a note without the original?
Often, yes. You'll sign a lost note affidavit. Some buyers won't buy lost notes, but many will if the rest of the file is solid.
Does a lost note mean the payer doesn't have to pay?
No. The payer still owes the debt. The terms don't change because the paper is lost.
What is a lost note affidavit?
It's a sworn statement that you own the note, it's lost, and you haven't sold it to anyone else. It often includes a promise to protect the buyer if the original turns up.
Will I get less for a lost note?
Usually a bit less. A clear copy, a recorded mortgage, and a good payment history keep the discount small.
Can the title company help?
Yes. They often have copies from closing, and they can prepare the affidavit.
See the full list of documents you need to sell a mortgage note.
Larry has invested in real estate since 2006 and has bought more than 300 mortgage notes. He runs LJH Investments, LLC, an Ohio company based in Madison, Indiana. More about Larry
This article is general information, not legal or tax advice. Laws change. Talk with your own attorney and tax adviser about your situation.