Assignment of Debt: When Notarial Endorsement Is Not Enforceable Against the Debtor

You are a property owner in Borgo, and you signed a notarial deed for a loan. A few years later, your bank informs you that the debt has been assigned to a third party. Then, that third party sues you for payment, presenting you with an enforceable copy of the notarial deed with an endorsement (a note on the back) in its favour. You wonder: is this assignment enforceable against me? Can I challenge it? The answer is nuanced, and the Court of Cassation has just reminded us of this in a judgment of 22 October 2020 (no. 19-19.999).

Let's imagine another scenario: you are a tenant in Lucciana, and your landlord has assigned his rent claim to a debt collection company. This company sends you a seizure-sale order, without you ever having received an official notification of the assignment. What should you do? The judgment we analyse sets out precise rules for the assignment to be validly enforceable against the debtor.

In this case, the Court of Cassation censures the Grenoble Court of Appeal for having declared an assignment by endorsement enforceable without establishing that the endorsement deed had been notified to the debtor by registered letter with acknowledgement of receipt by the notary who signed it. This requirement, derived from Article 6 of the Law of 15 June 1976, is an essential protection for the debtor. Let us decipher this decision and its practical implications together.

The Facts: A Story That Happens Every Day

Mr X, a property owner in Borgo, had taken out a mortgage loan from a credit institution, secured by a notarial deed. In 2015, the bank assigned its debt to a company, Valloire immobilier, by a deed of 29 June 2015. Then, in 2016, this company endorsed the notarial deed in its favour — that is, it placed a note on the back of the deed to present itself as the new creditor. It then served on Mr X a seizure-sale order (a recovery procedure by forced sale of movable property).

Mr X challenged the validity of this procedure, arguing that the assignment of debt was not enforceable against him due to lack of proper notification. The Grenoble Court of Appeal, in a judgment of 9 April 2019, ruled in favour of the company: it considered that Mr X had been informed of the assignment before the endorsement, and that the endorsement itself was mentioned in another deed. For the Grenoble judges, this was sufficient to render the assignment enforceable.

But Mr X appealed to the Court of Cassation. The Court of Cassation quashed the judgment: it criticised the Court of Appeal for not having verified that the endorsement deed had been notified to Mr X by registered letter with acknowledgement of receipt by the notary who signed the notarial endorsement deed. This formality is imposed by Article 6 of the Law of 15 June 1976, which governs the transfer of debts by endorsement.

The Reasoning of the Court — Dissected

The Court of Cassation relies on Article 6 of Law No. 76-519 of 15 June 1976 on certain forms of transfer of debts. This provision states that, to be enforceable against the debtor, the endorsement of a notarial deed must be NOTIFIED to the debtor by registered letter with request for acknowledgement of receipt, and this notification must be made by the notary who signed the endorsement deed. Why such a requirement? To protect the debtor: he must be officially informed that the debt has changed hands, and he must be able to verify the authenticity of the endorsement.

In this case, the Court of Appeal had held that Mr X had been informed of the assignment of debt by the deed of 29 June 2015, and that the endorsement was mentioned in another deed. But the Court of Cassation responds that this is not enough: the notification of the initial assignment (by the bank to the company) is not the same as the notification of the endorsement (by the company to the debtor). The endorsement is a separate act, which must be notified in the forms prescribed by law. Simple informal information, or a mention in a deed that was not notified, does not constitute a valid notification.

The judges of the Quai de l'Heure (seat of the Court of Cassation) are very strict on this formality. They remind us that the law is a matter of public policy: it cannot be circumvented by indirect means. If the assignee creditor (the one who receives the debt) wants to assert his right against the debtor, he must strictly comply with the legal procedure. The decision is therefore a confirmation of the rigour of formalities in matters of assignment of debt by endorsement. It is a protection for the debtor, who can thus be sure that the person pursuing him is indeed the new creditor.

What This Changes for You — Practically

For landlords: if you assign your rent claims to a management company, ensure that the notary notifies the endorsement to your tenants by registered letter with acknowledgement of receipt. Without this, the tenant could refuse to pay the assignee, and you would still be liable. For example, in Lucciana, a landlord assigned his unpaid rents to a debt collection agency. The endorsement was not notified. The tenant continued to pay the landlord, who had to reimburse the agency. Cost: €4,500 in rents, plus €800 in procedural costs.

For tenants: if you receive a payment demand from an assignee, demand proof of notification of the endorsement by registered letter with acknowledgement of receipt. If it is not provided, you can challenge the seizure. You have 15 days to apply to the enforcement judge after the order. Do not ignore the letters, but do not pay without verification.

For purchasers of a property subject to a mortgage: if the bank has assigned its debt, the endorsement must be notified to you if you are the debtor. Otherwise, you can demand to pay the original creditor. Beware of collection companies that present themselves without supporting documents.

For co-owners: the management company may assign debts for unpaid service charges. Demand notification of the endorsement. Without it, you can refuse to pay the assignee.

Four Tips to Avoid This Type of Dispute

• Demand official notification: as soon as you are informed of an assignment, ask the purported creditor to provide you with a copy of the registered letter with acknowledgement of receipt of notification of the endorsement, sent by the notary. Do not settle for a simple letter or a mention in a deed.
• Check the date of notification: the notification must precede any recovery procedure (order, seizure). If it is later, it is irregular.
• Keep all documents: if you are a debtor, keep the envelopes of the registered letters, the acknowledgements of receipt, and the notarial deeds. In case of dispute, these are your evidence.
• Consult a lawyer before paying: if you have any doubt, a 30-minute consultation can save you from paying twice or suffering an abusive seizure. Maître Zakine can verify the regularity of the procedure.

Further Reading: Related Case Law and Developments

This decision is part of a consistent line of jurisprudence: the Court of Cassation is very demanding regarding formalities for notification of assignments of debt. In a judgment of 14 November 2019 (no. 18-20.456), it had already held that notification by ordinary letter was insufficient, even if the debtor had knowledge of it. In another judgment of 5 July 2018 (no. 17-19.123), it specified that the notification must be made by the notary and not by the assignee itself.

The trend is therefore towards strengthening the protection of the debtor. Courts sanction any formal irregularity. For the future, expect creditors to be more vigilant, but also expect debtors to challenge procedures more often on this basis. If you are a creditor, systematically have the endorsement notified by the notary. If you are a debtor, do not hesitate to challenge.

Frequently Asked Questions

What is an endorsement of a notarial deed?
It is a note placed on the back of a notarial deed (such as a loan) by which the original creditor transfers his debt to a third party. This allows the third party to rely on the deed to recover the debt.

Can I refuse to pay if the endorsement was not notified to me by registered letter with acknowledgement of receipt?
Yes, you can raise the lack of notification. The assignee cannot pursue you until the notification is made. However, you must consign the sums due to avoid late payment interest.

What are the time limits for challenging a seizure-sale order based on an irregular endorsement?
You have 15 days from the service of the order to apply to the enforcement judge. After this period, you can still challenge the procedure within the seizure proceedings, but it is riskier.

What should I do if I have already paid an assignee without regular notification?
You can demand reimbursement from the assignee on the basis of unjust enrichment. But it is better not to pay without prior verification.

Can the notary refuse to notify the endorsement?
The notary is obliged to do so if the assignee requests it. In case of refusal, the assignee can apply to the president of the judicial court for an injunction.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →