Deed of Novation of Loan
This Deed of Novation of Loan is a tripartite agreement whereby the Lender transfers all of its rights and obligations relating to a particular loan agreement, to a new third party lender.
The execution provisions of this template are compliant and consistent with the requirements of the Land Registry for prescribed form deeds introduced from 20th September 2019.
The deed of novation only works where there
The rights are the right to receive repayment of the loan, and the right to receive interest.
The obligations are the requirements to make further advances to the borrower.
If there are no further advances to be made under the loan, a Deed of Assignment should be used in place of a Deed of Novation (see below right). An assignment transfers the lender’s rights under the original agreement (the main right being the right to be repaid) to the third party. An assignment cannot
There must be
The original lender should be mindful of its duties of confidentiality to the borrower. It cannot market the asset (ie. the loan) to potential buyers, as this would be in breach of its duty of confidentiality. However, the new lender will want to know information about the borrower, including the borrower’s identity and the terms and conditions of the loan agreement. The original lender must ensure that the borrower’s consent is obtained to make such disclosure to potential new lenders.
For the sake of simplicity, it is easier if the Date of Novation is an interest payment date. Otherwise, a calculation will have to be made of interest which has accrued but remains unpaid.
This Deed of Novation of Loan is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.
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