ASSEMBLY, No. 2321
STATE OF NEW JERSEY
INTRODUCED SEPTEMBER 16, 1996
By Assemblymen AUGUSTINE and WEINGARTEN
An Act concerning the assignment of certain mortgages and amending R.S.46:9-9.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. R.S.46:9-9 is amended to read as follows:
46:9-9. All mortgages on real estate in this State, and all covenants and stipulations therein contained, shall be assignable at law by writing, whether sealed or not, and any such assignment shall pass and convey the estate of the assignor in the mortgaged premises, and the assignee may sue thereon in his own name, but, in any such action by the assignee, there shall be allowed all just set-offs and other defenses against the assignor that would have been allowed in any action brought by the assignor and existing before notice of such assignment, except that, when the underlying mortgage is evidenced by an instrument meeting the criteria for negotiability set forth in N.J.S.12A:3-104, the holder of the instrument shall be a holder in due course and shall be afforded all the rights and protections provided a holder in due course pursuant to N.J.S.12A:3-302.
(cf: P.L.1987, c.357, s.4)
2. This act shall take effect immediately.
Currently, the assignee of a mortgage takes the mortgage subject to all set-offs and other defenses allowable against the assignor. This bill provides that if the underlying mortgage is evidenced by a negotiable instrument, such as a promissory note, the assignee shall be a holder in due course of the instrument and shall be afforded the rights and protections of a holder in due course. A holder in due course as defined in N.J.S.12A:3-302, is a holder who takes a negotiable instrument under circumstances which legally entitle the holder to protection against certain defenses which could be raised by the maker of the instrument or a third party.
Provides holder in due course status to holders of negotiable instruments secured by a mortgage.