The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:
Assignment is a means by which a lender can transfer its interest in a loan to another lender.
For an overview of the reasons why a lender might generally want to transfer a loan, see Practice Note: Key issues in loan transfers.
A loan (which is a debt) is a chose in action. A chose in action is something which is recoverable by legal action (as opposed to something which is physically possessed). As a basic principle, choses in action cannot be assigned at common law.
Assignments of choses in action are either:
statutory—often referred to as 'legal' assignments because they have an equivalent effect to legal assignments, or
equitable (see Practice Note: Transferring a loan by equitable assignment)
Under English law, an assignment is a transfer of rights; it does not transfer obligations (in contrast to a novation—see Practice Note: Transferring a loan by novation).
To take effect at law an assignment must be:
absolute, ie not conditional on any event or circumstance
in writing and signed by the assigning lender, and
notified to 'any person from whom the assignor would have been able to claim such debt' ie the borrower and any guarantors
For a loan transfer to be 'absolute' it must transfer the whole of the debt owed to the existing lender and not just
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