How Mortgage Allonge Works?

When you purchase real estate on loan, you get a mortgage form and a promissory note. The mortgage form is what states that your house will become yours on full payment. The promissory serves as an agreement between you and the loan provider that you will settle your debt with them.

These two documents will also be part of the transfer document if you decide to sell the property with the mortgage loan still on it. In addition to the promissory note, you get an endorsement document.

The endorsement document serves as affirmation that both the buyer and the seller of the mortgage house are in mutual agreement to sell the house. That endorsement document is what we refer to as a mortgage allonge or simply an allonge.

Mortgage Allonge Example

Allonges are primarily used in European countries like France. Let’s take a case study. A young man named Pierre purchases a house in Nice at €600,000. His mortgage loan contract is for five years.

He acquired a mortgage document and a promissory note for the loan. Two years down the line, he decides to sell the house and move away from the city. A young couple, the Erikson’s, take up an interest in the property and are willing to buy the house along with the mortgage on it.

Pierre signs over the mortgage form and the loan promissory note at the point of sale and transfer. Pierre also has to sign over an endorsement form, or the allonge, stating that the transfer is mutual. That endorsement document is what you call a mortgage allonge.

Mortgage Allonges vs. Bills of Exchange

Professionals usually use bills of exchange during universal trade, with each contract involving three parties instead of two. The primary party is the “drawee,” and they are responsible for paying the entire amount of money stipulated in the contract. The second party in the contract is the “drawer.” A drawer serves as a middleman between the drawee and the payee.

The last party in a bills of exchange contract is the “payee.” A payee is a party who receives all the money that the drawee pays. In an atypical situation where only two parties are involved in the bills of exchange, the drawer and the payee have to be the same person. You can transfer a bills of exchange contract using endorsements.

If this is the case, the first endorsement associated with a bills of exchange contract may require several rounds of review. To make sure all parties review this contract when they should, the bills of exchange will regularly appear with an allonge attached to the contract. The allonge serves as an additional space where parties can conduct future reviews relating to the bills of exchange contract. Before an allonge can have a legitimate or legal backing, any latest supporter must draw and sign their signature on the allonge.