Selling a debt involves two documents that work together: the deed of assignment between seller and buyer, and the notice of assignment to the debtor. The second is easy to overlook, but getting it wrong can leave the buyer unable to collect. Here is what you need to know.
What is a notice of assignment?
A notice of assignment is a written communication telling the debtor that the debt they owe has been transferred to a new creditor, and that future payments must be made to that new creditor. It does not need the debtor's consent — it simply informs them of a fact.
Why it matters so much
Under section 136 of the Law of Property Act 1925, written notice to the debtor is one of the requirements for a legal assignment. Until notice is given:
- The assignment is only equitable, which can mean the buyer has to join the original creditor to enforce in court.
- The debtor can validly pay the original creditor and discharge the debt — leaving the buyer to chase the seller for the money.
Notice is what makes the new creditor's right complete and enforceable against the debtor. Skip it and you undermine the whole transaction.
What the notice should contain
- Identification of the debt being assigned (amount, invoice or account reference, date).
- The identity of the new creditor (assignee).
- A clear statement that the debt has been assigned and that payment must now be made to the assignee.
- New payment details and a contact point.
- The date of the assignment.
Who sends it and when?
The notice can be sent by either the seller or the buyer, but it should go out promptly after completion. Best practice is to agree in the deed of assignment who will serve it. Send it in writing — by post and email — and keep proof of service.
The debtor's position after notice
The debtor is protected: they keep every defence and set-off they had against the original creditor, and the terms of the debt cannot worsen simply because it has been sold. All that changes is who they pay. A clear, professional notice actually helps the debtor by removing any doubt.
Common pitfalls
- No notice at all — the most damaging mistake, leaving only an equitable assignment.
- Vague notice that does not clearly identify the debt or the new creditor.
- No proof of service, so the buyer cannot show when notice was given.
- Ignoring any contractual notice requirements in the underlying agreement.
Conclusion
The notice of assignment is the step that turns a private sale into a right the buyer can enforce against the debtor. It is short, simple and essential. Whenever you sell or buy a debt, make sure a clear written notice reaches the debtor promptly — and keep the proof.
