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Factoring Notice of Assignment (NOA): Everything You Need to Know

A factoring notice of assignment (NOA) is usually required when you factor your invoices. Rest assured, NOAs are quite common in business and aren’t a cause for concern. However, it helps to understand what they are and how they work so that you can explain them to your customers as needed.

Assignment of Debt Explained

Companies transfer debt, along with all associated rights and obligations, to third parties all the time. One example of this occurs with collection companies. In these cases, the business, also referred to as the creditor, sells its uncollectable balances or assigns specific debts to the collection company. The collection company is then authorized to collect those specific balances on behalf of the creditor.

Assignment of debt may also come into play when businesses outsource their receivables and leverage certain types of funding, among other situations.

What Does Notice of Assignment Mean?

The customer, also referred to as the debtor, must be informed when a creditor assigns their debt to a third party. The document used in this process is referred to as a notice of assignment of debt.

What is a Notice of Assignment in Factoring?

When you leverage invoice factoring , you’re selling an unpaid B2B invoice to a factoring company at a discount. In exchange, you receive up to 98 percent of the invoice’s value right away and get the remaining sum minus a small factoring fee when your client pays. This means you’re not waiting 30, 60, or more days for payment. This cash flow acceleration helps businesses bridge cash flow gaps caused by slow-paying customers, seasonality, rapid growth, and more. Plus, the cash can be used for anything the business needs. This unique process means businesses can receive immediate funding without creating debt like other funding sources.

A notice of assignment is required in factoring because you’re assigning debt to a third party – the factoring company – and the customers involved need to know.

The Role of Notice of Assignment for Cash Flow

Invoice factoring stands out as a solution for businesses seeking to improve their cash flow. When a company decides to use invoice factoring, it enters into a factoring relationship, where accounts receivable and financial rights are handled differently than usual. This process involves the NOA, a pivotal document in factoring transactions. Essentially, NOA is a simple letter informing customers that the payment terms have changed and future payments should be made payable to the factoring company.

This notification ensures that there are no misdirected payments, which is a critical aspect when managing accounts payable and securing immediate cash. By using factoring, businesses can access working capital, which reduces the strain of slow-paying customers. It’s important for factoring clients to understand how factoring companies notify your customers and the implications of this process. The factoring contract typically outlines these details, ensuring that every party in a factoring transaction is aware of their responsibilities, especially regarding remittance addresses and payment information.

Factoring services offer an alternative to traditional lines of credit, providing businesses with high advances at low rates. This method is beneficial for companies that demand longer payment terms from their clients. By transferring the right to collect payments to the factoring company, the business can focus on its core operations while the finance company handles the receivables. Understanding the benefits of factoring and effectively communicating them to your customers may improve the factoring process and maintain healthy customer relationships, even when introducing new financial arrangements like invoice factoring.

The Importance of a Notice of Assignment in Factoring

Notice of Assignment in invoice factoring keeps your customers in the loop so they know who is collecting and why. It also lets them know where to send their payments. This streamlines the process and helps ensure there’s no confusion about where payments need to go.

Elements of a Factoring NOA Document

Each factoring company words its NOA a bit differently, but NOAs usually include:

• A statement that indicates the factoring company is now managing the invoice or invoices.
• A notice that payments should be made to the factoring company.
• Details on how payments can be made, including addresses, bank details, or payment portal information.
• What will occur if payments are sent to the business instead of the third party.
• A signature from someone at your business to show your customer that the NOA is authentic and a signature space for your customer to sign indicating that they’ve read and understand the document.

How Do Factoring Companies Notify Your Customers

A factoring notice of assignment is usually sent to customers by U.S. mail, though sometimes factoring companies use other delivery services or even digitize the NOA.

What Will Your Clients Think of You Factoring Your Invoices?

Sometimes, businesses that are new to invoice factoring have concerns about how customers will react to factoring or receiving an NOA. However, it’s usually not a cause for concern.

Although your factoring company isn’t an outsourcing company, it behaves quite similarly when collecting invoices. Nearly 40 percent of small businesses outsource at least one business process, Clutch reports. That means a significant portion of your customers already have some experience engaging with third parties. Furthermore, invoice factoring is growing in leaps and bounds and is expected to grow by eight percent in the coming years, per Grandview Research . Many of your customers already have experience with factoring or will very soon. Because most businesses have some exposure to factoring or will in the near future, it’s generally seen as an ordinary business practice – nothing more, nothing less.

However, even if factoring is entirely new to your customers, how they respond to your decision is often determined by how you present it. For instance, it accelerates payments without putting pressure on your customers to pay faster. It has benefits for them, too, and can help improve the relationship. This alone can actually help some businesses win bids or attract new customers. Explaining it to them this way can help soothe any concerns if customers come to you with questions.

How to Ensure Your Customer Relationships Are Protected

Most factoring companies will take good care of their customers because they are a reflection of you. Your repeat business helps ensure they’ll have repeat business. However, reviewing a factoring company’s testimonials and success stories is always a good idea to understand better how they operate before you sign up.

It’s also essential to work with a company like Viva that doesn’t send mass notifications to all its customers. We only notify those who are debtors on the invoices you’d like to factor to eliminate any confusion.

Lastly, it’s better to work with a company that provides you with 24/7 access to your account so you can see what’s paid and outstanding at a glance and can make decisions about orders using real-time data.

Request a Complimentary Invoice Factoring Quote

At Viva Capital, we always provide white glove care to the businesses we serve and their customers.As part of our service, we handle the Notice of Assignment with professionalism. Our collection experts make it easy for your customers to manage their bills and are happy to answer their questions. You’ll also have access to your personal Customer Account Portal so you can make informed decisions on the fly and always know what’s outstanding. To learn more or get started, request a complimentary invoice factoring quote .

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THE NOTICE OF ASSIGNMENT: A REFRESHER COURSE

Allen J. Heffner Nov 20, 2023

The Notice of Assignment is probably the single most important document for a Factor. Understanding what needs to be included in the Notice of Assignment, how to send it, and who to send it to can mean the difference between getting paid and not. Despite the fact that every Factor is (or should be) familiar with legal requirements relating to Notices of Assignment, we still find that many of our factoring clients who end up in litigation make basic mistakes relating to their Notices of Assignment. The article focuses on what information needs to be included in the Notice, who the Notice should be sent to, and how the Notice should be delivered.

What needs to be included in the Notice of Assignment?

To be effective, there is certain information that must be included in the Notice of Assignment. The Uniform Commercial Code (“UCC”) requires that the notice must:

• Notify the Account Debtor that the amount due or to become due has been assigned;
• Notify the Account Debtor that payment is to be made to the Factor;
• Reasonably identify the rights assigned; and
• Be signed by the Factor or its client.

The Notice of Assignment should also include a remittance address so the Account Debtor is informed how and in what manner the Factor should be paid.

Additionally, while not explicitly required under the current version of the UCC, Factors should include language in their Notice of Assignment that: (i) the Client has assigned all of its present and future accounts receivable to Factor; (ii) the Factor holds a first priority security interest in all of the client’s accounts receivable; and (iii) all payments owing to the client must be paid to the Factor.

Who should the Notice of Assignment be sent to?

Notices of Assignment should not be sent directly to individuals with an Account Debtor. Sending the Notice to a specific individual may lead to issues relating to the authority of that individual to receive documents on behalf of the Account Debtor. Moreover, Factors that direct Notices of Assignment directly to individuals open themselves up to arguments that the Notices of Assignment was not properly delivered. For instance, our clients that have sent Notices of Assignment to individuals have ended up in situations where the individual to whom the Notice of Assignment was addressed no longer worked with the Account Debtor or the individual was located at a different office and the Notice of Assignment was not sent to the proper location. To be safe and to avoid unnecessary issues, Factors should send the Notice of Assignment to the Account Debtor’s accounts payable department.

Additionally, some states have specialized definitions for what constitutes “notice” on behalf of a company. If there is any question as to where a Notice of Assignment should be sent, Factors should check with their attorney to determine where these should be sent.

How should the Notice of Assignment be delivered?

The crucial issue for the enforceability of a Notice of Assignment is proof of receipt by the Account Debtor, not proof of delivery. Therefore, it is good business practice to send the Notice of Assignment either certified mail or other method that provides for proof of delivery.

Many of our clients have asked about whether it is proper to deliver the Notice of Assignment via e-mail asking the Account Debtor to confirm receipt or with “read receipts” turned on. Some Factors prefer this method because it is more cost efficient.

While sending Notices of Assignment via e-mail is enforceable, we would not recommend it as a general business practice. Sending the Notice in this manner requires delivering the Notice to a specific individual, which we have discussed above can be problematic. Sometimes officers and directors of companies have assistants or other personnel manage their e-mail accounts, raising the possibility that the individual to whom the Notice was sent, never saw the e-mail, even though the e-mail was “read.”

Last, there is no requirement that the Notice be signed by the Account Debtor and returned to the Factor. Often, we see our client’s Notice include a “confirmation of receipt” line for the Account Debtor to sign and return. Sometimes, the Factor will have proof of delivery to the Account Debtor but the Notice was not signed and returned by the Account Debtor. This adds unnecessary ambiguity as to whether the Notice was actually received by the Account Debtor. Therefore, we instruct our clients not to include such requests for proof of receipt.

Who should send the Notice of Assignment?

Some of our clients that have had bad experiences with Account Debtors after delivering a Notice of Assignment have chosen to have their Client be the one to deliver the Notice of Assignment. There is no legal requirement as to whether the Factor or the Client is the correct party to deliver the Notice of Assignment. However, we recommend the Factor be the one to deliver the Notice of Assignment. This way, the Factor is in complete control of the contents of the Notice of Assignment, how it is delivered, and receives confirmation of its delivery. We have been in situations in which the Factor allowed the Client to deliver the Notice of Assignment, but the Client did not deliver the Notice of Assignment in accordance with the law, leading to avoidable litigation.

Should a Factor respond to an Account Debtors questions regarding a Notice of Assignment?

Absolutely, yes. If requested by an Account Debtor, pursuant to the UCC, a Factor must furnish reasonable proof of the assignment for the Notice of Assignment to be valid. Too often we see situations in which requests are made or questions are posed by Account Debtors that the Factor ignores, thinking that because the Account Debtor received the Notice of Assignment, nothing else needs to be done. The Factor should respond to the Account Debtor and provide reasonable proof of the assignment. These communications can also provide invaluable insight as to the relationship between the client and the Account Debtor, how and when payments will be made, and can provide the Account Debtor a sense of trust with the Factor.

A Notice of Assignment is crucial for Factors because it provides legal protection, establishes priority of interest, prevents confusion, facilitates legal recourse, and enables effective communication with Account Debtors. Without this notice, Factors may encounter difficulties in asserting their rights and collecting payments from Account Debtors, potentially jeopardizing the financial transaction.

Bruce Loren and Allen Heffner of the Loren & Kean Law Firm are based in Palm Beach Gardens and Fort Lauderdale. For over 25 years, Mr. Loren has focused his practice on construction law and factoring law.  Mr. Loren has achieved the title of “Certified in Construction Law” by the Florida Bar. The Firm represents factoring companies in a wide range of industries, including construction, regarding all aspects of litigation and dispute resolution. Mr. Loren and Mr. Heffner can be reached at [email protected] or [email protected] or 561-615-5701

Bruce E. Loren · Michael I. Kean · Allen J. Heffner · Kyle W. Ohlenschlaeger · Frank Sardinha, III · Lucia E. DeFilippo

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What is a Notice of Assignment?

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When you enter a factoring contract, you agree to sell your invoices, or accounts receivable, to a factoring company or third party that gives you a cash advance. This third party will then become your company’s collection department on these invoices. To notify your clients of this change of invoice ownership, the financial provider will send them a Notice of Assignment (NOA).

If you’re considering factoring your accounts receivable, you may be wondering what an NOA contains and what effects it may have on your customers and business. In this guide, we’ll cover the components of an NOA, how your factoring company sends them, and their role in the factoring process.

What is a NOA in Factoring?

A notice of assignment is a simple letter from a third party to your customers. It legally explains that a change of invoice ownership has occurred, informing your clients that a third party (bank, factoring company, financing company) will now manage and collect accounts receivable. The NOA will provide a remittance address so customers can update their payment information. The purpose of this communication is to notify your customers of a change in the collection process.

What Is a Notice of Assignment?

Understand how implementing a Notice of Assignment with Porter Capital’s factoring services can fast-track your receivables!

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How Do Factoring Companies Notify Your Customers?

Factoring is more common than ever and clients range from NYC modeling agencies and namesake branded product line manufacturers, to small startup companies selling gourmet food items. No company is too large or too small to factor their invoices and many work with big box stores that demand longer payment terms to have products on their shelves. These 90 to 120 day payment terms can make factoring a necessity for smooth cash flow.

Your customers will receive the NOA as a letter in the mail to sign and return. Your business will also receive a copy of this letter. Ensure you fully understand the language used in the NOA and your responsibilities in the transition process. Sometimes business owners worry about their customers’ reactions to receiving an NOA. Invoice factoring is becoming an increasingly popular and acceptable means for financing businesses across many industries, so your customers may already be accustomed to the process. You can alert your clients about a coming NOA, proactively resolving any questions or concerns that may arise.

Why Is a NOA in Factoring Important?

When you enter a factoring contract, you agree to sell the intangible financial rights to your invoices and receive cash up front for those invoices. Because the rights are intangible, factoring companies need legal language that outlines ownership of the AR. Once the NOA is completed, a business receives the cash advance while the factor waits for invoice payments. The NOA is a critical part of the financial relationship and protects the financing provider in the event of misdirected payments. An NOA ensures all parties are aware of their responsibilities throughout the factoring process so everyone can enjoy the benefits.

Components of a NOA Document

The NOA document will contain a few vital pieces of information, including:

• Notification that accounts receivable have been assigned and is payable to a third party
• An updated payment address.
• An explanation of customer liability in the event of a misdirected payment.

Each component of the NOA ensures the factoring relationship runs smoothly by giving customers the information they need to make correct payments. It may also outline steps for your company to take if you receive a misdirected payment.

Contact Porter Capital for a Factoring Quote

When you need to improve your cash flow, consider invoice factoring with Porter Capital. With over 30 years in the business, we can offer you and your customers the reliable and trustworthy services you expect and deserve. We will help you find the best solutions for your specific business demands, enabling you to enjoy greater stability and flexibility.

Work with a trusted factoring company to expand your business, get ahead of the competition and increase customer satisfaction. Contact us online today to receive a quote for our factoring services.

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The Role of a Notice of Assignment in Invoice Factoring

• April 27, 2023

When using invoice factoring, you sell and assign the rights, title, and interest in your accounts receivable to a factoring company. The rights you assign include the right to receive payment for the accounts receivable. A Notice of Assignment is a document that is used to notify your customers that you have sold accounts receivable to a factor.

What is Included in a Notice of Assignment?

A Notice of Assignment (“NOA”) is a letter sent by the factoring company (“factor”) to your customers (aka “account debtors”) notifying them that the ownership of your accounts receivable, or invoices, has changed hands to the factor, and payments should be made in accordance with the instructions provided.

The Uniform Commercial Code (UCC) provides guidance on certain information that must be included in the NOA in order to make it effective.  The notice must:

• Advise your customer, the account debtor, that the amount/ invoice due has been assigned to the factoring company
• Advise that payment is to be made to the factoring company and not any other party
• Include remittance details so your customer is informed how payment should be made
• Be signed by the factoring company or the client

In some cases, the NOA may include language that deems continued use of your services to be consent to the terms of the NOA. The factor can, however, require your customers to sign and return a copy of the NOA to acknowledge receipt. Enforceability of a NOA is reliant on proof of receipt by the account debtor therefore, it is important to send the notice in a manner that provides proof of receipt by the account debtor.

The factor may revoke an NOA by sending a signed and notarized release notification to your customers. They will revoke an NOA if you decide not to factor an account any longer or if the factoring relationship has been terminated. An NOA can only be revoked if the account has no outstanding invoice balances.

The Importance of Sending a NOA to Your Customers

The NOA informs the parties to a factoring transaction of their responsibilities and provides the remittance details needed to make payments, so your factoring relationship flows smoothly without interruption. It also protects the factor in case you, the client, receive the payment instead of the factoring company.

From a legal perspective, a NOA explains to your customers that any payments made to you instead of the factor will not satisfy their obligation to pay outstanding invoices. Your customers may be held liable for payments made to you if they ignore the NOA or do not update accounts payable information.

If your customers continue to pay you for factored invoices, and you deposit those payments into your bank account, it is important to note that you may be responsible for penalties and additional fees for the extra time it takes for the factor to receive payment. Your factoring agreement may also include a misdirected payment fee you will have to pay if you fail to send the misdirected payments to the factor.

The best way to avoid any penalties or additional fees is to monitor customer compliance with the terms of the NOA, and take steps immediately to correct any situations where customers are misdirecting payments to your company instead of the factoring company.

Handling of Payments for Non-Factored Invoices

When you factor your accounts receivable, you agree to direct all payments for all current and future invoices to the factor, including payments for invoices you did not factor. This avoids the confusion that would otherwise occur, ensures the factoring company receives every payment, and streamlines the payment process. It prevents your customer from needing to maintain two vendors in their accounting system with differing payment instructions and reduces the likelihood of misdirected payments.

Your factoring agreement will include a procedure for handling payments for non-factored invoices. This may include sending you the total amount in a reserve release or applying the payments to open invoices and sending you the difference. Typically, when a factor receives payment for a non-factored invoice, the proceeds will be forwarded to you once the funds clear their bank account. Make sure you understand the procedure so that you comply with the NOA and avoid possible confusion affecting your relationship with your customer and the factor.

Explaining Your Decision to Factor to Your Customers

Before you begin a factoring relationship and your customers receive a NOA, it is always a good idea to explain to your customers why you have decided to factor their invoices.

Your customer should understand that your decision to factor is a positive step intended to improve your finances. Factoring is not a loan. Factoring provides access to working capital and cash flow so you can purchase materials/supplies, improve staffing and facilities to meet or exceed customer requirements and take on new or larger projects.

Invoice factoring allows you to continue offering the same payment terms your customers currently enjoy. Furthermore, you may be able to offer better payment terms based on the factoring facility.

It’s important to let customers know that outside of invoicing, their relationship will not change. You will still be providing the highest level of quality products and services. Customers want to be assured their business will not be impacted by your decision. The more you can do to assure customers that most things will not change, the more likely they will be comfortable

—–

The NOA is an important document that facilitates invoice factoring. It explains how payments are to be handled so that transactions flow smoothly between your company, customers and the factoring company.

Capstone is a leading commercial finance company that provides a range of financial products designed to meet the cash flow and working capital needs of nearly any type of business, including trade financing, invoice factoring, and PO financing. Contact Capstone at (212) 755-3636 to learn how invoice factoring can accelerate the conversion of your accounts receivable into immediate cash.

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Learn About Notice of Assignment for Invoice Factoring

In a  factoring  relationship, you agree to assign your selected receivables to the factoring company. By advancing your  cash  against your invoices, the factor has purchased the right to collect amounts due from your customers. The Notice of Assignment is a critical part of your factoring paperwork as it reflects the change in invoice ownership.

What is a Notice of Assignment?

The Notice of Assignment is a simple letter the factoring company sends to your customers whose invoices you are factoring. In writing, the notice informs your customers that the accounts receivable is assigned, and future payments should be made payable to the factoring company. The notice will also include a remittance address so your customer can change their payment information.

The Notice of Assignment legally explains to your customers that any payments they make to you instead of the factor will not satisfy their obligation. The factoring company may hold your customers liable for misdirected amounts. This may occur if your customers choose to ignore the notice or fail to update payment information.

Many factors will require your customers to sign and return a copy of the notice to acknowledge receipt. This is not always required, though. Instead, the Notice of Assignment may include language that considers your customer’s continued use of your services to constitute an agreement to the notice. In addition, the factor may only revoke a Notice of Assignment if they send a signed and notarized release notification to your customers. They will do so if you choose not to factor that account any longer or you end your factoring relationship. In either case, the account must have no outstanding balance.

What Programs Don’t Use a Notice of Assignment?

Financing programs that do not use a notice of assignment include non-notification factoring and sales ledger financing.

Non-notification factoring is similar to regular factoring, but with a few key differences. Instead of sending a conventional Notice of Assignment to customers, the factoring company informs them of a new payment address using the company’s regular letterhead. This allows the customer to still send payments to the new address without being aware that it belongs to the factor. To qualify for non-notification factoring, companies typically need to have monthly revenues of at least $300,000, a track record of over a year, reliable financial reports, and no serious financial difficulties.

Sales ledger financing operates like a line of credit based on outstanding receivables. Companies can access up to 90% of their outstanding receivables at any given time without the need to submit a factoring schedule of accounts for each transaction. Although the finance company still handles payments, the customer does not receive a Notice of Assignment. Instead, they receive a letter indicating a change in the payment address. Sales ledger financing offers greater flexibility compared to non-notification factoring, with daily rates allowing for better cost control. The qualification requirements for sales ledger financing usually include monthly revenues of at least $300,000, a track record of 1-2 years, reliable financial reports, good receivables management systems, and no serious financial difficulties.

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Why do Factoring Companies Notify Your Customers?

The Notice of Assignment is a vital form of protection for a factoring company. It protects the factor in case the  business owner  (the factor’s client) receives the payment instead of the factoring company.

In a best-case scenario, the notice serves to inform every party in a factoring transaction of their rights and responsibilities. It also gives your customer the appropriate address to make account payments, allowing your factoring relationship to continue smoothly.

In a worst-case scenario, a factor can recover unpaid amounts from your customer should they continuously pay over notice or not pay at all. A Notice of Assignment is evidence in any legal proceeding — from a demand letter for payment to a full-fledged lawsuit — that asserts the factor’s standing and rights to payment.

What Will Your Customers Think?

Customers may have concerns or questions when they receive a letter regarding the use of invoice factoring. It’s understandable that they may be unsure or unfamiliar with this financing tool. As a business owner, it’s important to address these concerns and communicate with your customers effectively.

First and foremost, it’s essential to acknowledge that invoice factoring is a common practice utilized by many small and midsize companies to finance their operations and facilitate growth. Chances are, your customers are already aware of this financing method and how it works.

When discussing invoice factoring with your customers, emphasize the benefits it provides to them. By using factoring, you can offer them extended payment terms, such as 30- to 60-day terms, while still ensuring excellent service. This enables your customers to utilize their available cash resources more effectively. Without factoring, providing extended payment terms might be challenging, especially for businesses experiencing growth.

It’s crucial to assure your customers that little is changing in terms of the services and support your company provides. Reassure them that they will still have the same level of communication and engagement with you and your employees as before. Highlight that despite factoring being implemented, your commitment to their satisfaction remains unchanged.

Address the misconception that factoring indicates financial trouble within your company. Remind your customers that factoring is a versatile tool used to achieve various goals and objectives, just like other forms of financing such as loans or lines of credit. Factoring simply serves to smooth out your cash flow and support your business’s overall financial stability and growth.

Overall, open communication with your customers is key. Provide them with transparency and reassurance, explaining the benefits of factoring and emphasizing that it is a common and established financing practice. By effectively addressing their concerns, you can foster trust and maintain strong relationships with your valued customers.

Why a Notice of Assignment Matters To You

You will receive a copy of the Notice of Assignment that the factor sends to your customers. While the notice is to inform your customers, it also has an important implication for you as well.

As your  factoring agreement  explains, payments your company receives from your customers over notice are payable to the factoring company. Even in the smoothest transition, you may receive payments sent before receipt of the notice or released before your customers’ updated their payment system. There will likely be a provision explaining the procedure for sending misdirected payments to the factor in these cases. Misdirected payments are usually sent by overnight check or via bank transfer.

However, you may be responsible for additional penalties and fees if your customers continue to pay over notice, and you deposit those payments into your account. In addition, you may end up owing more, depending on fee structure, due to the extra time it takes for the factor to receive payment. Some factors include a misdirected payment fee in the  factoring agreement  that you will have to pay if you fail to return misdirected payments to the factor. Therefore, fees may be higher if you are responsible for the misdirection.

As with any legal document, be sure to be fully aware of the language used within the Notice of Assignment. Be mindful of your customers’ responsiveness to the notice. Take action immediately if you realize that any of your customers are not sending their payments on time. This transparency solidifies your factoring relationship, builds trust with your factor, and protects your interests.

What if the Payment is for an Invoice I Didn’t Factor?

When you assign your customers’ receivables to your factoring company, you agree to direct all payments to the factor, even for invoices that you did not factor. This eliminates complications for all parties and ensures that the factoring company receives every payment they should. Without an all-inclusive assignment, your customers would receive a notification every single time you factor an invoice. They would have to retain two addresses on file, increasing the likelihood of misdirected payments.

Your factoring company will have a straightforward procedure in place to address non-factored payments. This may include applying those payments to open invoices and sending you the difference or the total amount in a regularly scheduled reserve release. Stay prepared by asking your factor about their policies surrounding non-factored payments.

Factor Finders can help you find the right factoring company  for your  invoice factoring  needs.  Contact us  to learn more about our factoring services for every industry and to get started today.

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What is a Notice of Assignment?

Last Updated May 1, 2024

If you’re a business owner considering invoice factoring, the Notice of Assignment (NOA) may cause you some concern. What will my customers think? Why is it necessary? Can we skip sending it? Let’s address these questions to clarify what the NOA covers and put to rest any lingering apprehension.

What Is a Factoring Notice of Assignment?

The notice of assignment (NOA) informs your customer that a third party (bank, financing company, or factoring company) will manage and collect your accounts receivable (AR) going forward. The NOA arrives in the mail in the format of a letter, as the initial communication notifying your customers of the change in structure and process.

What Will My Customers Think?

Tremendous growth in the use of invoice factoring across many industries has made factoring more common than ever. According to the Global Factoring Market 2016-2020 report, analysts expect factoring to grow over 10% annually for the next several years.

Many of our factoring clients work with Fortune 500 companies who simply demand longer payment terms in order to do business. Clients using invoice factoring often show an appetite for accelerating growth and more efficiently managing operations and collections.

In short, you are most likely more concerned about it than your customers. Factoring is a widely used and acceptable means for financing your business.

Why Is a Notice of Assignment Important?

In a factoring relationship, a business sells the future collection of accounts receivable (AR) in exchange for cash advances. So, the asset (future AR) belongs to the third party upon completion of the work or delivery of the goods. The business receives the cash advance, and the third party waits for payment by the business’ customer.

Mildred Glaze, Senior Account Manager at altLINE, explains further, “The factor sends out the notice of assignment to be sure they place their client’s customers on notice to submit all payments to the factor and not to their client. The factor will essentially become their client’s accounts receivable department, documenting invoices and payments.”

Due to the intangible nature of AR, the third-party provider needs legal language showing ownership of the AR. Thus, the legal language found in the NOA minimizes the risk placed on the third-party provider. Third party providers require a NOA. It is critical to the structure of the factoring relationship and protects the third-party provider in the event of misdirected payments.

In the case of a redirected payment, Glaze explains, “If a payment is in inadvertently sent to the client [instead of the factoring company], then the client turns around and forwards/sends the original method of payment to the factor…We then turnaround and re-notify that particular customer to have them confirm updating the remittance in their system.”

What Is Covered in a Notice of Assignment?

The main points covered in a Notice of Assignment include:

• Business’ accounts receivable has been assigned and is payable to a third party provider
• Updated payment address, typically a lock box
• Liability on the customer in the event of misdirected payment

How We’re Different

By working with altLINE, your customers recognize the reliability and stability of your financing partner. Rather than receiving an NOA from an unknown entity or independent financing company, the bank’s reputation as the lender of choice strengthens your customer relationship.

Read our article on the benefits of factoring through a bank for more information or get a free quote today!

What does a notice of assignment mean in trucking?

A notice of assignment (NOA) is a document that notifies your customers that your factoring company has the right to collect payments on invoices. In a factoring relationship, a business sells its invoices to a third-party factoring company, which then collects payment on them. An NOA notifies your customers of this change in structure.

Who provides a notice of assignment?

Grey was previously the Director of Marketing for altLINE by The Southern Bank. With 10 years’ experience in digital marketing, content creation and small business operations, he helped businesses find the information they needed to make informed decisions about invoice factoring and A/R financing.

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Notice of assignment in invoice factoring

Many businesses that are underserved by banks - such as startups and those engaged in international trade - are turning to alternative funding solutions, such as invoice factoring, to access liquid capital, reaping the rewards in speed, efficiency, and simplicity. However, each of these financial services includes documentation to ensure a smooth process and to avoid relationships or contracts breaking down. For example, in an invoice factoring agreement, the finance provider must issue a 'notice of assignment'.

In this guide, Stenn explains what a notice of assignment is and its role in an invoice factoring agreement.

What is a notice of assignment (NOA)?

A notice of assignment is issued in an invoice factoring agreement - in which an intermediary provider buys a company's accounts receivable and assumes responsibility for chasing payment from the debtors.

In this agreement, the factoring company must advise each debtor that it has taken ownership of the right to collection.

A notice of assignment (NOA) is the legal document presented to the owing party, proving that the invoice factoring company is eligible to assume ownership of debts owed to their client. It's a legal agreement that informs accounts payable that a third party will receive invoice payments instead of the original invoice owner.

What is included in an NOA?

A notice of assignment (NOA) is a legal document that must be drafted in a certain format, with several key elements that must be included. These are essential in providing the terms, contract information and stipulations of the debts being bought:

• Proof of Assignment: All notices of assignment must include proof of debt ownership. This must include a warning that accounts payable shall now be directed to a third party, who that third party is and the accounts that need to be paid.
• Address: The notice of assignment must include a new payment address associated with the factoring provider.
• Liability Warning: An explanation and warning of the parameters for customer liability in the event of a misdirected payment and the repercussions for missed payments.

Why is an NOA important in factoring?

A notice of assignment is important in factoring as it gives the debtor a clear outline of whom further payments will be sent to, and the third party now involved in taking over debt liability.

It also provides a factoring company with proof that they now have ownership over those liabilities. This allows for smooth and effective cross-party communication and outlines the responsibilities of both parties in binding legal terms.

This represents an important part of the invoice factoring process - as the exporter signs over ownership of its invoice, allowing it to continue offering attractive delayed payment terms to importers without risking bad debt or being unable to meet its own accounts payable obligations. The importer simply has to amend payment details when paying the invoice, with no further obligations or expectations.

Plus, an NOA is one of only two documents that a client needs to sign to qualify for invoice factoring with Stenn - and this process is fully online, making it easy to apply in just minutes.  

For more information on invoice factoring and the process of applying for finance with Stenn, check out our helpful video .

How will it affect business?

When a notice of assignment has been issued, the invoice factoring company takes control of the debts as a third party, and the previous owner of those debts receives an advance on owed payments quickly.

The significant consideration for any company accessing invoice factoring - and therefore notice of assignment - is the fees associated with the service. Invoice factoring providers buy customer invoices at a slight discount, meaning the client doesn't receive the full invoice amount owed.

No major aspects of the debt change for the owing party, which simply amends the company to which it submits full payment of its accounts payable. However, some stipulations of mispayments may change as may the terms by which repayments can be enforced.

This includes the supplier-buyer relationship, which remains unchanged. Invoice factoring services simply allow the buyer to enjoy longer payment terms while the supplier gets immediate access to liquid capital, which it can invest in improving its offering long-term.

Access invoice factoring with Stenn

Are you engaged in overseas trade with delayed payment terms? Do you need a liquid capital injection to help cover your own accounts payable in the short term or to fund business growth? Simply submit your unpaid invoices for an instant working capital boost.

Stenn finances invoices for hundreds of small and medium-sized importers and exporters with manageable payment terms. And we only require two documents to be signed to qualify for funding, so we don't need to see your credit score.

Apply for financing with Stenn today or find out about the other financing options available to your business in our Resource Hub - including guides to:

• Invoice financing
• Revenue-based financing
• Stock financing
• Business Lines lines of credit
• Alternative lending options for e-commerce businesses

  About the Authors

This article is authored by the Stenn research team and is part of our educational series.

Stenn is the largest and  fastest-growing online platform  for financing small and medium-sized businesses engaged in international trade. It is based in London, provides financing services in 74 countries and is backed by financial giants like  HSBC ,  Barclays ,  Natixis  and many others.

Stenn provides liquid cash to SMEs within the global financial system. On stenn.com you can apply online for  financing and trade credit protection  from  $10 000 to $10 million (USD) . Only  two documents  are required.  No collateral  is needed and  funds are transferred within 48 hours  of approval.

Check the  financing limit available on your deal  or go straight to Stenn's  easy online application form .

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Disclaimer : The above article has been prepared on the basis of Stenn's understanding of the subject. It is for information only and doesn't constitute advice or recommendation. Whilst every care has been taken in preparing this article, we cannot guarantee that inaccuracies will not occur. Stenn International Ltd. will not be held responsible for any loss, damage or inconvenience caused as a result of anything published above. All those applying for credit should seek professional advice when doing so.

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13 February 2023

Notice of Assignment in Factoring in the U.S

When a business uses invoice factoring, they transfer ownership of its accounts receivable to a factoring company, which then has the responsibility to collect payment for those invoices.

Therefore, a document is issued to alert its customers of this. This is known as a notice of assignment.

Meaning of Notice of Assignment

A notice of assignment is a document that notifies clients that a factoring company has acquired ownership of their accounts receivable, or invoices, from the original business.

The notice's objective is to alert customers to the ownership change and specify who should receive payments.

Importance of Notice of Assignment

A notice of assignment is vital because it officially notifies customers that the ownership of an invoice has changed hands and that they should now direct payments to the factoring company.

The notice helps ensure that payments are sent to the appropriate parties , avoiding misunderstandings and potential conflicts and preventing uncertainty.

In the event of a disagreement, having a detailed and official notice of assignment can safeguard the legal interests of both the company and the factoring company.

Impact of Notice of Assignment on Businesses

The possible impacts faced by businesses by using a factoring company and sending their customers a notice of assignment are:

1. Enhanced customer relationships: By providing clear and official notification to customers of the change in ownership of invoices, a business can help maintain and strengthen its relationship with them.

2. Improved cash flow: By transferring ownership of invoices to a factoring company, a business can receive payment more quickly and improve its overall cash flow.

3. Increased operational efficiency: By using a factoring company to manage the collections process, a business can free up internal resources and focus on its core operations, leading to increased efficiency.

4. Reduced risk: By transferring the responsibility of collecting payment to a factoring company, a business can reduce its exposure to the risk of non-payment and bad debt.

However, before deciding to utilize factoring , it's crucial to consider any potential drawbacks, such as losing control over the collection process and the expense of the factoring service.

Factors Covered in a Notice of Assignment The main sections covered are:

• The company's accounts receivable have been transferred to a third-party financial institution, and payment should now be made to them
• The customer should now send payments to a new address, typically a secure payment processing location
• The customer will be responsible if they make a payment to the wrong address

Information in a Notice of Assignment

In a factoring notice of assignment, the following details are covered to notify the business’ customer about the transfer of ownership of accounts receivable:

• Particulars of the accounts receivable being assigned , including the amount and invoice numbers
• Details of the factor and the client/debtor
• Specifics of the assignment of the accounts receivable, including the effective date and any conditions of the assignment
• Instructions for the customer on how to direct future payments to the factor
• Any other relevant terms and conditions of the factoring agreement

What Happens When an Obligor Doesn’t Receive Notice of Agreement

A business that sells its accounts receivables (invoices) to a third-party factor must send a notice of agreement to its customers.

The purpose of the notice is to inform the customer that the factor has taken ownership of the invoice, and the payments should be made directly to the factor instead of the business.

If the customer does not receive the notice, they may continue to make the payments to the business, leading to confusion, delayed payments to the factor and potential disputes.

In some cases, the customer may have the right to demand a return of the payment made to the factor or stop payment if the notice of assignment was not correctly given.

How to Receive Notice of Agreement

A factoring notice of agreement is typically provided by the factoring company or third-party factor that has purchased the accounts receivable (invoices) from the business.

The notice is usually generated by the factor and given to the business to send to its customers.

The business may also be responsible for ensuring that the notice of assignment is delivered correctly to its customers.

Some factoring companies provide templates or sample notices that the business can use.

Requirements for a Notice of Assignment

To obtain a notice of assignment (NOA) from a factoring company, the following requirements are necessary:

• Monthly revenue of at least $300,000
• A stable financial track record of 1-2 years
• Accurate and trustworthy financial reports
• Effective management of accounts receivable
• No significant financial difficulties

1. Who Sends a Factoring Notice of Assignment? A factoring notice of assignment is typically sent by the business that has sold its accounts receivables or invoices to a third-party factor or factoring company.

The factor usually provides the notice of assignment, and the business may have to sign a factoring agreement with the factor to obtain the notice.

The notice informs the business’ customers that the factor has taken over the ownership of the invoices, and the payments should be made directly to the factoring company instead of the business.

2. How Much Does a Notice of Assignment Cost? The cost for issuing a notice of assignment in factor can differ based on various elements, such as the amount assigned, the state where the assignment is taking place and the particular provisions of the assignment agreement.

This cost may include legal fees, filing paperwork fees and other administrative expenses. It's crucial to examine the assignment agreement thoroughly to determine the precise cost and be aware of any additional fees that may be incurred.

3. How Long Does a Notice of Assignment Take? The duration of issuing a notice of assignment in factoring can differ based on particular circumstances. Usually, the process can take anywhere between a few days to weeks.

The length of the time may be influenced by factors such as the state in which the assignment is getting issued, the complexity of the assignment agreement and the accessibility of relevant parties.

Moreover, the time needed for the notice of assignment may be affected by any legal challenges or hindrances.

4. Does Notice of Assessment Mean You Owe Money? In the United States, a notice of assessment usually implies that you owe money to the government.

However, it is contingent on particular circumstances. The Internal Revenue Service (IRS) sends out the notice of assessment to inform taxpayers of any modification to their tax obligations.

If the notice displays an increase in the amount owed, it implies that the taxpayer has an outstanding balance with the IRS and should pay it promptly to prevent further interest and penalties.

On the other hand, if it shows a decrease in the amount owed, it showcases that the taxpayer has paid more taxes than required and may be eligible for a refund.

It is, therefore, always advisable to thoroughly examine the notice and to get help from a professional.

5. Is Notice of Agreement a Proof of Debt? A notice of agreement alone is not considered proof of a debt. The document merely outlines the terms and conditions agreed upon by the parties involved.

It is not enough evidence to confirm the presence of debt but rather serves as a record of the agreement between the parties.

To establish proof of debt, other financial documents such as receipts, invoices or other documentation may be necessary.

The specific requirements for proving a debt depend upon the type of debt and the laws of the jurisdiction where it is being established.

6. What is a Letter of Release? A letter of release from a factoring company is a declaration that a debt has been satisfied and is no longer the company's responsibility.

In factoring, a business sells its accounts receivable to a factoring company for a fee to receive cash quickly.

Upon receiving the payment on the accounts receivable by the business’ customer, the factoring company issues a letter of release, confirming that the debt has been fully paid off and the company is no longer obligated to it.

The letter serves as proof that the debt has been fully resolved. It can be used to clear the debt from the business's financial records.

The specifics of the letter of release, including the terms and conditions, will depend on the particular factoring agreement and the laws in the jurisdiction where it is formed and drafted.

Siddhi Parekh

Finance manager at drip capital.

Table of Content

• Information in a NOA
• What Happens When an Obligor Doesn’t Receive NOA
• How to Receive NOA
• Requirements for NOA

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What is a Notice of Assignment in Trucking?

Trucking companies factor invoices every day. It’s a common practice in the industry to partner with a factoring company that provides cash flow so that truckers keep hauling the goods we need daily.

What is Factoring?

Factoring is the purchasing of account receivables (invoices) at a discount. The trucking company that enters into an agreement with the factor, sells its invoices for loads they hauled and then gets an advance payment (anywhere from 70-90%). The factoring company, in turn, collects payment for that invoice from the broker. Once the factoring company gets paid by the broker, it will take its factoring fee and remit the balance of the invoice to the trucking company.

A standard part of the factoring agreement is a notice of assignment (NOA) sent by the factoring company to the broker. Factoring companies usually send brokers one NOA at the beginning of their business partnership with the trucking company.

An NOA is a legal agreement that informs the accounts payable that a third party will receive payments, rather than the original owner of the invoice. In trucking, the NOA informs a broker of the trucking company’s relationship with the factor and instructs the broker to remit all payments to the factoring company instead of directly to the carrier that hauled their load.

If the broker pays anybody other than the factoring company without written consent, and that includes the carrier, it is then required by law to repay the amount of the invoice to the factoring company.

What is an NOA Release Letter?

When is there a need for an NOA release letter? An NOA release letter is sent by the factoring company to the broker when the business partnership between the factor and the carrier has been dissolved. NOA release letters are usually brief, and they may sometimes inform the broker of where to submit future invoice payments for that carrier. If a new address to remit invoice payments is available, the factor will provide it to the broker. Otherwise, it is strictly a notice of the terminated business relationship.

Check Out the Apex Factoring Guide

At Apex Capital, we pride ourselves in transparency with clients and brokers, who are our clients’ customers. If you have questions about how to switch factoring companies or would like more information, check out our free comprehensive factoring guide .

Finding the right factoring partner can be key to growing your trucking company. Apex factoring is here to help you manage your cash flow with a variety of valuable tools as well as excellent customer service and back-office support. Visit our website or give us a call at 855-369-2739 .

Assignments: why you need to serve a notice of assignment

Catherine phillips.

PSL Principal Associate

It's the day of completion; security is taken, assignments are completed and funds move. Everyone breathes a sigh of relief. At this point, no-one wants to create unnecessary paperwork - not even the lawyers! Notices of assignment are, in some circumstances, optional. However, in other transactions they could be crucial to a lender's enforcement strategy. In the article below, we have given you the facts you need to consider when deciding whether or not you need to serve notice of assignment.

What issues are there with serving notice of assignment?

Assignments are useful tools for adding flexibility to banking transactions. They enable the transfer of one party's rights under a contract to a new party (for example, the right to receive an income stream or a debt) and allow security to be taken over intangible assets which might be unsuitable targets for a fixed charge. A lender's security net will often include assignments over contracts (such as insurance or material contracts), intellectual property rights, investments or receivables.

An assignment can be a legal assignment or an equitable assignment. If a legal assignment is required, the assignment must comply with a set of formalities set out in s136 of the Law of Property Act 1925, which include the requirement to give notice to the contract counterparty.

The main difference between legal and equitable assignments (other than the formalities required to create them) is that with a legal assignment, the assignee can usually bring an action against the contract counterparty in its own name following assignment. However, with an equitable assignment, the assignee will usually be required to join in proceedings with the assignor (unless the assignee has been granted specific powers to circumvent that). That may be problematic if the assignor is no longer available or interested in participating.

Why should we serve a notice of assignment?

The legal status of the assignment may affect the credit scoring that can be given to a particular class of assets. It may also affect a lender's ability to effect part of its exit strategy if that strategy requires the lender to be able to deal directly with the contract counterparty.

The case of General Nutrition Investment Company (GNIC) v Holland and Barrett International Ltd and another (H&B) provides an example of an equitable assignee being unable to deal directly with a contract counterparty as a result of a failure to provide a notice of assignment.

The case concerned the assignment of a trade mark licence to GNIC . The other party to the licence agreement was H&B. H&B had not received notice of the assignment. GNIC tried to terminate the licence agreement for breach by serving a notice of termination. H&B disputed the termination. By this point in time the original licensor had been dissolved and so was unable to assist.

At a hearing of preliminary issues, the High Court held that the notices of termination served by GNIC , as an equitable assignee, were invalid, because no notice of the assignment had been given to the licensee. Although only a High Court decision, this follows a Court of Appeal decision in the Warner Bros Records Inc v Rollgreen Ltd case, which was decided in the context of the attempt to exercise an option.

In both cases, an equitable assignee attempted to exercise a contractual right that would change the contractual relationship between the parties (i.e. by terminating the contractual relationship or exercising an option to extend the term of a licence). The judge in GNIC felt that "in each case, the counterparty (the recipient of the relevant notice) is entitled to see that the potential change in his contractual position is brought about by a person who is entitled, and whom he can see to be entitled, to bring about that change".

In a security context, this could hamper the ability of a lender to maximise the value of the secured assets but yet is a constraint that, in most transactions, could be easily avoided.

Why not serve notice?

Sometimes it's just not necessary or desirable. For example:

• If security is being taken over a large number of low value receivables or contracts, the time and cost involved in giving notice may be disproportionate to the additional value gained by obtaining a legal rather than an equitable assignment.
• If enforcement action were required, the equitable assignee typically has the option to join in the assignor to any proceedings (if it could not be waived by the court) and provision could be made in the assignment deed for the assignor to assist in such situations. Powers of attorney are also typically granted so that a lender can bring an action in the assignor's name.
• Enforcement is often not considered to be a significant issue given that the vast majority of assignees will never need to bring claims against the contract counterparty.

Care should however, be taken in all circumstances where the underlying contract contains a ban on assignment, as the contract counterparty would not have to recognise an assignment that is made in contravention of that ban. Furthermore, that contravention in itself may trigger termination and/or other rights in the assigned contract, that could affect the value of any underlying security.

What about acknowledgements of notices?

A simple acknowledgement of service of notice is simply evidence of the notice having been received. However, these documents often contain commitments or assurances by the contract counterparty which increase their value to the assignee.

Best practice for serving notice of assignment

Each transaction is different and the weighting given to each element of the security package will depend upon the nature of the debt and the borrower's business. The service of a notice of assignment may be a necessity or an optional extra. In each case, the question of whether to serve notice is best considered with your advisers at the start of a transaction to allow time for the lender's priorities to be highlighted to the borrowers and captured within the documents.

For further advice on serving notice of assignment please contact Kirsty Barnes or Catherine Phillips  from our Banking & Finance team.

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.

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The Critical Need to Give Proper Notice of Assignment

A recent decision out of the Maryland federal courts is a good reminder of how critical it is to properly notify account debtors of an assignment of secured loans (and leases) so as to make the account debtor legally obligated to pay you, and to assure that they pay the assignor at their peril.  The case, Forest Capital LLC v. BlackRock, Inc. , 2015 U.S. Dist. LEXIS 23773 (D. Md. Feb. 26, 2015), involved a lawsuit filed by Forest Capital LLC against BlackRock, Inc. for conversion and violations of the Uniform Commercial Code (UCC). The facts of the case are quite different from a standard equipment lease/loan because it involved a factoring relationship. The lessons to be learned, however, are nonetheless applicable to what is a routine occurrence in our industry – the assignment of loans and leases. The case involved a factor who alleged that a depository institution improperly made two payments totaling $1.05 million to the borrower’s creditors despite receiving notice that the borrower’s rights in the monies held by the depository institution had been assigned to the factor. The Court granted the depository institution’s motion to dismiss the lawsuit, finding, amongst other reasons, that the factor never gave the depository institution proper notice under the UCC. The Court found that the alleged notice (a December 2013 letter sent by the borrower) was legally insufficient because it was “vague” and did not “reasonably identify the rights assigned.” Moreover, the factor never countersigned, or was copied on, the letter. While again the case involved unique facts, the notice was defective under the same UCC provisions governing the notice routinely given in the equipment leasing and finance industry when loans and leases are assigned (as is often the case when a broker or lessor is involved). Thus, the decision is nonetheless an important reminder to ensure that proper notice of assignment is given to the account debtor. Proper notice of assignment achieves two important objectives for an assignee under two separate sections of Article 9 of the UCC. First, under UCC 9-406(a), it puts the account debtor “on the hook” for ensuring that payments are actually made to, and received by, the assignee. Second, under UCC 9-404(a), it cuts off the account debtor’s right to assert against the assignee claims and defenses – such as offset – arising after the notice is issued and related to the underlying loan transaction, as well as those claims and defenses arising after the notice is issued and related to other transactions between the account debtor and the assignor. Absent effective notice of assignment, the account debtor may continue to pay the assignor and may raise against the assignee defenses and claims which accrued even after the assignment took place (1.) .  This begs the question – what constitutes proper notification?  First, the content of the notice must be sufficient. Under UCC 9-404(a) – the code section which cuts off defenses – the notice must be authenticated, convey the essential fact of the assignment, and identify the assignee. However, UCC 9-406 – the code section which obligates the account debtor to pay you and not the assignor – is somewhat more stringent. The notice must not only be authenticated (2.) , but also must include a demand that future payments be made directly to the assignee (3.) , and must “reasonably identify the rights assigned. (4.) ”  Authentication can normally be satisfied by sending the notice on the assignee’s letterhead or on a form upon which the assignee’s name appears (5.) . As far as what constitutes “reasonable identification”, while there is no “black letter rule” defining it, an appropriate level of common sense should be employed. It should go without saying that an assignee should not rely on simply issuing new invoices listing the assignee’s address, or notifying the account debtor in conversation (as a factor unfortunately did in another case where the Court found the notice ineffective (6.) ). The notice should be a separate written communication and care should be taken to identify the collateral, the loan documents, the parties to the loan documents, and indicate an account/loan number, if applicable. The more detail, the better. Also, keep in mind that if an account debtor is notified to pay anything less than the full amount of an installment to the assignee, he can ignore the notice because it’s ineffective (7.) .   Second, the account debtor must actually receive the notification. Notice which is merely sent to the address listed in the loan documents which is no longer a valid address, is unlikely to pass muster. While we’re cognizant of the economic realities underlying deal flow in the equipment leasing and finance industry – especially on smaller ticket deals – it behooves an assignee to avoid treating the notice as a merely ministerial matter. Care should be taken to identify the proper address (e.g., an Internet search, post office inquiry, credit report, or skip trace). Also, as is the case in most commercial transactions, if the account debtor is a company, the appropriate agents to receive notice should be identified (e.g., CEO, office manager, etc.). Notice is probably best sent via ordinary U.S. Mail as well as via certified or registered mail, return receipt requested, as well as via email.  Moreover, while again in many states an assignee’s ownership of the loan/lease is not predicated upon obtaining a written assignment, it’s important to remember that an account debtor has the right to request “reasonable proof” of the assignment from the assignee. Until such proof is received, any payments made to the assignor will count towards discharge of the obligation assigned (8.) . Therefore, best practices dictate that the assignee obtain a written assignment and retain it in the file.  Finally, these are all general guidelines and counsel on a state-by-state basis, and if possible, on a transaction-by-transaction basis, should review assignee notices. In addition, consumer transactions may be subject to other laws establishing special rules for consumer account debtors and thus care should be taken to address those rules as well.

1. Notably, however, defenses and counterclaims are not available to the account debtor if he contractually waived those defenses in the loan/lease documents (i.e., the industry standard “Waiver of Defenses” provision) and certain conditions are met, such as the assignee has no knowledge of any defenses (UCC 9-403). It is also important to remember that notice of assignment is not required to validate the assignment itself. In fact, in many states, not only is notice irrelevant, but a written assignment itself is not even required. 2. UCC 9-406(a) 3. UCC 9-406(a) 4. UCC 9-406(b)(1) 5. UCC 9-406, Official Comment 2 6. In re Haley, 81 UCC rep. 2d 990 (Bankr. N.D. Ala. 2013). 7. UCC 9-406(b)(3) 8. UCC 9-406(c)

What is a notice of assignment?

An assignment takes place when one party is holding a right to property, claims, bills, lease, etc., of another party and wishes to pass it along (or sell it) to a third party. As complicated as that sounds, it really isn’t. Strangely enough, many assignments can be made under the law without immediately informing, or obtaining the permission, of the personal obligated to perform under the contract. An example of this is when your mortgage is sold to another mortgage company. The original mortgage company may not inform you for several weeks, and they certainly aren’t going to ask your permission to make the sale.

If a person obligated to perform has received notice of the assignment and still insists on paying the initial assignor, the person will still be obligated to pay the new assignee according to the agreement. If the obligated party has not yet been informed of the assignment and pays the original note holder (assignor), the assignor is obligated to turn those funds over to the new assignee. But, what are the remedies if this doesn’t take place? Actually, the new assignee may find themselves in a difficult position if the assignor simply takes off with their funds or payment. They are limited to taking action against the person they bought the note from (assignor) and cannot hold the obligator liable. Therefore, it is important to remember that if any note or obligation is assigned to another party, each party should be well aware of their responsibilities in the transaction and uphold them according to the laws of their state. Assignment forms should be well thought out and written in a manner which prevents the failure of one party against another.

Related posts:

• Does your Agreement Require an Assignment Legal Form?
• Why Every Landlord and Tenant Needs a Lease Agreement
• Why you need a Power of Attorney and How to Assign One

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• Kreyòl Ayisyen

§ 1024.36 Requests for information.

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(a) Information request. A servicer shall comply with the requirements of this section for any written request for information from a borrower that includes the name of the borrower, information that enables the servicer to identify the borrower's mortgage loan account, and states the information the borrower is requesting with respect to the borrower's mortgage loan. A request on a payment coupon or other payment form supplied by the servicer need not be treated by the servicer as a request for information. A request for a payoff balance need not be treated by the servicer as a request for information. A qualified written request that requests information relating to the servicing of the mortgage loan is a request for information for purposes of this section, and a servicer must comply with all requirements applicable to a request for information with respect to such qualified written request.

1. Borrower's representative. An information request is submitted by a borrower if the information request is submitted by an agent of the borrower. A servicer may undertake reasonable procedures to determine if a person that claims to be an agent of a borrower has authority from the borrower to act on the borrower's behalf, for example, by requiring that a person that claims to be an agent of the borrower provide documentation from the borrower stating that the purported agent is acting on the borrower's behalf. Upon receipt of such documentation, the servicer shall treat the request for information as having been submitted by the borrower.

2. Owner or assignee of a mortgage loan. i. When a loan is not held in a trust for which an appointed trustee receives payments on behalf of the trust, a servicer complies with § 1024.36(d) by responding to a request for information regarding the owner or assignee of a mortgage loan by identifying the person on whose behalf the servicer receives payments from the borrower. A servicer is not the owner or assignee for purposes of § 1024.36(d) if the servicer holds title to the loan, or title is assigned to the servicer, solely for the administrative convenience of the servicer in servicing the mortgage loan obligation. The Government National Mortgage Association is not the owner or assignee for purposes of such requests for information solely as a result of its role as the guarantor of the security in which the loan serves as the collateral.

ii. When the loan is held in a trust for which an appointed trustee receives payments on behalf of the trust, a servicer complies with § 1024.36(d) by responding to a borrower's request for information regarding the owner, assignee, or trust of the mortgage loan with the following information, as applicable:

A. For any request for information where the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation is not the owner of the loan or the trustee of the securitization trust in which the loan is held: The name of the trust, and the name, address, and appropriate contact information for the trustee. Assume, for example, a mortgage loan is owned by Mortgage Loan Trust, Series ABC-1, for which XYZ Trust Company is the trustee. The servicer complies with § 1024.36(d) by identifying the owner as Mortgage Loan Trust, Series ABC-1, and providing the name, address, and appropriate contact information for XYZ Trust Company as the trustee.

B. If the request for information did not expressly request the name or number of the trust or pool and the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation is the owner of the loan or the trustee of the securitization trust in which the loan is held: The name and contact information for the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, as applicable, without also providing the name of the trust.

C. If the request for information did expressly request the name or number of the trust or pool and the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation is the owner of the loan or the trustee of the securitization trust in which the loan is held: The name of the trust, and the name, address, and appropriate contact information for the trustee, as in comment 36(a)-2.ii.A above.

See interpretation of 36(a) Information request. in Supplement I

(b) Contact information for borrowers to request information. A servicer may, by written notice provided to a borrower, establish an address that a borrower must use to request information in accordance with the procedures in this section. The notice shall include a statement that the borrower must use the established address to request information. If a servicer designates a specific address for receiving information requests, a servicer shall designate the same address for receiving notices of error pursuant to §  1024.35(c). A servicer shall provide a written notice to a borrower before any change in the address used for receiving an information request. A servicer that designates an address for receipt of information requests must post the designated address on any Web site maintained by the servicer if the Web site lists any contact address for the servicer.

1. Exclusive address not required. A servicer is not required to designate a specific address that a borrower must use to request information. If a servicer does not designate a specific address that a borrower must use to request information, a servicer must respond to an information request received by any office of the servicer.

2. Notice of an exclusive address. A notice establishing an address that a borrower must use to request information may be included with a different disclosure, such as a notice of transfer. The notice is subject to the clear and conspicuous requirement in § 1024.32(a)(1). If a servicer establishes an address that a borrower must use to request information, a servicer must provide that address to the borrower in the following contexts:

i. The written notice designating the specific address, required pursuant to § 1024.35(c) and § 1024.36(b).

ii. Any periodic statement or coupon book required pursuant to 12 CFR 1026.41.

iii. Any Web site the servicer maintains in connection with the servicing of the loan.

iv. Any notice required pursuant to §§ 1024.39 or .41 that includes contact information for assistance.

3. Multiple offices. A servicer may designate multiple office addresses for receiving information requests. However, a servicer is required to comply with the requirements of § 1024.36 with respect to an information request received at any such address regardless of whether that specific address was provided to a specific borrower requesting information. For example, a servicer may designate an address to receive information requests for borrowers located in California and a separate address to receive information requests for borrowers located in Texas. If a borrower located in California requests information through the address used by the servicer for borrowers located in Texas, the servicer is still considered to have received an information request and must comply with the requirements of § 1024.36.

4. Internet intake of information requests. A servicer may, but need not, establish a process for receiving information requests through email, Web site form, or other online intake methods. Any such online intake process shall be in addition to, and not in lieu of, any process for receiving information requests by mail. The process or processes established by the servicer for receiving information requests through an online intake method shall be the exclusive online intake process or processes for receiving information requests. A servicer is not required to provide a separate notice to a borrower to establish a specific online intake process as an exclusive online process for receiving information requests.

See interpretation of 36(b) Contact information for borrowers to request information. in Supplement I

(c) Acknowledgment of receipt. Within five days (excluding legal public holidays, Saturdays, and Sundays) of a servicer receiving an information request from a borrower, the servicer shall provide to the borrower a written response acknowledging receipt of the information request.

(d) Response to information request —

See interpretation of 36(d) Response to information request. in Supplement I

(1) Investigation and response requirements. Except as provided in paragraphs (e) and (f) of this section, a servicer must respond to an information request by either:

See interpretation of 36(d)(1) Investigation and response requirements. in Supplement I

(i) Providing the borrower with the requested information and contact information, including a telephone number, for further assistance in writing; or

(ii) Conducting a reasonable search for the requested information and providing the borrower with a written notification that states that the servicer has determined that the requested information is not available to the servicer, provides the basis for the servicer's determination, and provides contact information, including a telephone number, for further assistance.

1. Information not available. Information is not available if:

i. The information is not in the servicer's control or possession, or

ii. The information cannot be retrieved in the ordinary course of business through reasonable efforts.

2. Examples. The following examples illustrate when information is available (or not available) to a servicer under § 1024.36(d)(1)(ii):

i. A borrower requests a copy of a telephonic communication with a servicer. The servicer's personnel have access in the ordinary course of business to audio recording files with organized recordings or transcripts of borrower telephone calls and can identify the communication referred to by the borrower through reasonable business efforts. The information requested by the borrower is available to the servicer.

ii. A borrower requests information stored on electronic back-up media. Information on electronic back-up media is not accessible by the servicer's personnel in the ordinary course of business without undertaking extraordinary efforts to identify and restore the information from the electronic back-up media. The information requested by the borrower is not available to the servicer.

iii. A borrower requests information stored at an offsite document storage facility. A servicer has a right to access documents at the offsite document storage facility and servicer personnel can access those documents through reasonable efforts in the ordinary course of business. The information requested by the borrower is available to the servicer assuming that the information can be found within the offsite documents with reasonable efforts.

See interpretation of Paragraph 36(d)(1)(ii). in Supplement I

(2) Time limits —

(i) In general. A servicer must comply with the requirements of paragraph (d)(1) of this section:

(A) Not later than 10 days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives an information request for the identity of, and address or other relevant contact information for, the owner or assignee of a mortgage loan; and

(B) For all other requests for information, not later than 30 days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives the information request.

(ii) Extension of time limit. For requests for information governed by the time limit set forth in paragraph (d)(2)(i)(B) of this section, a servicer may extend the time period for responding by an additional 15 days (excluding legal public holidays, Saturdays, and Sundays) if, before the end of the 30-day period, the servicer notifies the borrower of the extension and the reasons for the extension in writing. A servicer may not extend the time period for requests for information governed by paragraph (d)(2)(i)(A) of this section.

(3) Omissions in responses to requests. In its response to a request for information, a servicer may omit location and contact information and personal financial information (other than information about the terms, status, and payment history of the mortgage loan) if:

(i) The information pertains to a potential or confirmed successor in interest who is not the requester; or

(ii) The requester is a confirmed successor and the information pertains to any borrower who is not the requester.

(e) Alternative compliance. A servicer is not required to comply with paragraphs (c) and (d) of this section if the servicer provides the borrower with the information requested and contact information, including a telephone number, for further assistance in writing within five days (excluding legal public holidays, Saturdays, and Sundays) of receiving an information request.

(f) Requirements not applicable —

See interpretation of 36(f) Requirements not applicable. in Supplement I

(1) In general. A servicer is not required to comply with the requirements of paragraphs (c) and (d) of this section if the servicer reasonably determines that any of the following apply:

See interpretation of 36(f)(1) In general. in Supplement I

(i) Duplicative information. The information requested is substantially the same as information previously requested by the borrower for which the servicer has previously complied with its obligation to respond pursuant to paragraphs (c) and (d) of this section.

1. A borrower's request for a type of information that can change over time is not substantially the same as a previous information request for the same type of information if the subsequent request covers a different time period than the prior request.

See interpretation of Paragraph 36(f)(1)(i). in Supplement I

(ii) Confidential, proprietary or privileged information. The information requested is confidential, proprietary or privileged.

1. Confidential, proprietary or privileged information. A request for confidential, proprietary or privileged information of a servicer is not an information request for which the servicer is required to comply with the requirements of § 1024.36(c) and (d). Confidential, proprietary or privileged information may include information requests relating to, for example:

i. Information regarding management or profitability of a servicer, including information provided to investors in the servicer.

ii. Compensation, bonuses, or personnel actions relating to servicer personnel, including personnel responsible for servicing a borrower's mortgage loan account;

iii. Records of examination reports, compliance audits, borrower complaints, and internal investigations or external investigations; or

iv. Information protected by the attorney-client privilege.

See interpretation of Paragraph 36(f)(1)(ii). in Supplement I

(iii) Irrelevant information. The information requested is not directly related to the borrower's mortgage loan account.

1. Examples of irrelevant information. The following are examples of irrelevant information:

i. Information that relates to the servicing of mortgage loans other than a borrower's mortgage loan, including information reported to the owner of a mortgage loan regarding individual or aggregate collections for mortgage loans owned by that entity;

ii. The servicer's training program for servicing personnel;

iii. The servicer's servicing program guide; or

iv. Investor instructions or requirements for servicers regarding criteria for negotiating or approving any program with a borrower, including any loss mitigation option.

See interpretation of Paragraph 36(f)(1)(iii). in Supplement I

(iv) Overbroad or unduly burdensome information request. The information request is overbroad or unduly burdensome. An information request is overbroad if a borrower requests that the servicer provide an unreasonable volume of documents or information to a borrower. An information request is unduly burdensome if a diligent servicer could not respond to the information request without either exceeding the maximum time limit permitted by paragraph (d)(2) of this section or incurring costs (or dedicating resources) that would be unreasonable in light of the circumstances. To the extent a servicer can reasonably identify a valid information request in a submission that is otherwise overbroad or unduly burdensome, the servicer shall comply with the requirements of paragraphs (c) and (d) of this section with respect to that requested information.

1. Examples of overbroad or unduly burdensome requests for information. The following are examples of requests for information that are overbroad or unduly burdensome:

i. Requests for information that seek documents relating to substantially all aspects of mortgage origination, mortgage servicing, mortgage sale or securitization, and foreclosure, including, for example, requests for all mortgage loan file documents, recorded mortgage instruments, servicing information and documents, and sale or securitization information and documents;

ii. Requests for information that are not reasonably understandable or are included with voluminous tangential discussion or assertions of errors;

iii. Requests for information that purport to require servicers to provide information in specific formats, such as in a transcript, letter form in a columnar format, or spreadsheet, when such information is not ordinarily stored in such format; and

iv. Requests for information that are not reasonably likely to assist a borrower with the borrower's account, including, for example, a request for copies of the front and back of all physical payment instruments (such as checks, drafts, or wire transfer confirmations) that show payments made by the borrower to the servicer and payments made by a servicer to an owner or assignee of a mortgage loan.

See interpretation of Paragraph 36(f)(1)(iv). in Supplement I

(v) Untimely information request. The information request is delivered to a servicer more than one year after:

(A) Servicing for the mortgage loan that is the subject of the information request was transferred from the servicer receiving the request for information to a transferee servicer; or

(B) The mortgage loan is discharged.

(2) Notice to borrower. If a servicer determines that, pursuant to this paragraph (f), the servicer is not required to comply with the requirements of paragraphs (c) and (d) of this section, the servicer shall notify the borrower of its determination in writing not later than five days (excluding legal public holidays, Saturdays, and Sundays) after making such determination. The notice to the borrower shall set forth the basis under paragraph (f)(1) of this section upon which the servicer has made such determination.

(g) Payment requirement limitations —

(1) Fees prohibited. Except as set forth in paragraph (g)(2) of this section, a servicer shall not charge a fee, or require a borrower to make any payment that may be owed on a borrower's account, as a condition of responding to an information request.

(2) Fee permitted. Nothing in this section shall prohibit a servicer from charging a fee for providing a beneficiary notice under applicable State law, if such a fee is not otherwise prohibited by applicable law.

(h) Servicer remedies. Nothing in this section shall prohibit a servicer from furnishing adverse information to any consumer reporting agency or pursuing any of its remedies, including initiating foreclosure or proceeding with a foreclosure sale, allowed by the underlying mortgage loan instruments, during the time period that response to an information request notice is outstanding.

(i) Potential successors in interest.

1. Requests that indicate that the person may be a successor in interest. Section 1024.36(i) requires a servicer to respond to certain written requests received from a person that indicate the person may be a successor in interest. Examples of written requests that indicate that the person may be a successor in interest include, without limitation, a written statement from a person other than a borrower indicating that there has been a transfer of ownership or of an ownership interest in the property to the person or that a borrower has been divorced, legally separated, or died, or a written loss mitigation application received from a person other than a borrower.

2. Time limits. A servicer must respond to a request under § 1024.36(i) not later than the time limits set forth in § 1024.36(d)(2). Servicers subject to § 1024.38(b)(1)(vi)(B) must also maintain policies and procedures reasonably designed to ensure that, upon receiving notice of the existence of a potential successor in interest, the servicer can promptly determine the documents the servicer reasonably requires to confirm that person's identity and ownership interest in the property and promptly provide to the potential successor in interest a description of those documents and how the person may submit a written request under § 1024.36(i) (including the appropriate address). Depending on the facts and circumstances of the request, responding promptly may require a servicer to respond more quickly than the time limits established in § 1024.36(d)(2).

3. Potential successor in interest's representative. An information request pursuant to § 1024.36(i) is submitted by a potential successor in interest if the information request is submitted by an agent of the potential successor in interest. A servicer may undertake reasonable procedures to determine if a person that claims to be an agent of a potential successor in interest has authority from the potential successor in interest to act on the potential successor in interest's behalf, for example, by requiring that a person that claims to be an agent of the potential successor in interest provide documentation from the potential successor in interest stating that the purported agent is acting on the potential successor in interest's behalf. Upon receipt of such documentation, the servicer shall treat the request for information as having been submitted by the potential successor in interest.

See interpretation of 36(i) Potential successors in interest. in Supplement I

(1) With respect to any written request from a person that indicates that the person may be a successor in interest and that includes the name of the transferor borrower from whom the person received an ownership interest and information that enables the servicer to identify the mortgage loan account, a servicer shall respond by providing the potential successor in interest with a written description of the documents the servicer reasonably requires to confirm the person's identity and ownership interest in the property and contact information, including a telephone number, for further assistance. With respect to the written request, a servicer shall treat the potential successor in interest as a borrower for purposes of the requirements of paragraphs (c) through (g) of this section.

(2) If a written request under paragraph (i)(1) of this section does not provide sufficient information to enable the servicer to identify the documents the servicer reasonably requires to confirm the person's identity and ownership interest in the property, the servicer may provide a response that includes examples of documents typically accepted to establish identity and ownership interest in a property; indicates that the person may obtain a more individualized description of required documents by providing additional information; specifies what additional information is required to enable the servicer to identify the required documents; and provides contact information, including a telephone number, for further assistance. A servicer's response under this paragraph (i)(2) must otherwise comply with the requirements of paragraph (i)(1). Notwithstanding paragraph (f)(1)(i) of this section, if a potential successor in interest subsequently provides orally or in writing the required information specified by the servicer pursuant to this paragraph (i)(2), the servicer must treat the new information, together with the original request, as a new, non-duplicative request under paragraph (i)(1), received as of the date the required information was received, and must respond accordingly.

(3) In responding to a request under paragraph (i)(1) of this section prior to confirmation, the servicer is not required to provide any information other than the information specified in paragraphs (i)(1) and (2) of this section. In responding to a written request under paragraph (i)(1) that requests other information, the servicer must indicate that the potential successor in interest may resubmit any request for information once confirmed as a successor in interest.

(4) If a servicer has established an address that a borrower must use to request information pursuant to paragraph (b) of this section, a servicer must comply with the requirements of paragraph (i)(1) of this section only for requests received at the established address.

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Notice of Receipt of Request From the Government of the Republic of Lebanon Under Article 9 of the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property

A Notice by the State Department on 08/15/2024

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• Document Details Published Content - Document Details Agency Department of State Agency/Docket Number Public Notice: 12490 Document Citation 89 FR 66484 Document Number 2024-18243 Document Type Notice Page 66484 (1 page) Publication Date 08/15/2024 Published Content - Document Details
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Department of State

• [Public Notice: 12490]

Department of State.

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Notice of receipt of request from Lebanon for cultural property protection.

Andrew Zonderman, Cultural Heritage Center, Bureau of Educational and Cultural Affairs: (202) 632-9935; [email protected] ; include “El Salvador” in the subject line.

The Government of the Republic of Lebanon made a request to the Government of the United States on January 23, 2024, under Article 9 of the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property. Lebanon's request seeks U.S. import restrictions on archaeological and ethnological materials representing Lebanon's cultural patrimony. The Cultural Heritage Center website will provide instructions for public comment and additional information on the request, including categories of material that may be included in import restrictions: https://eca.state.gov/​cultural-property-advisory-committee-meeting-Sept-24-26-2-24 . This notice is published pursuant to authority vested in the Assistant Secretary of State for Educational and Cultural Affairs and pursuant to 19 U.S.C. 2602(f)(1) .

Allison R. Davis Lehmann,

Executive Director, Cultural Property Advisory Committee, Bureau of Educational and Cultural Affairs, Department of State.

[ FR Doc. 2024-18243 Filed 8-14-24; 8:45 am]

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