Today I was reading a few pages in my text book Practical Real Estate Law about promissory notes. It first started to describe who the maker was (the one making the promise) and the payee (the one who the promise is made to). Then there is also a party called the holder who is a third party that buys the promissory not from the payee. This is like Fannie Mae buying a note from a bank.
What I found the most interesting was that if the maker and the payee come into agreement to buy and sell a house under a negotiable note, any warranty the payee offers to the maker is not transferred to the holder in due course (which I do not understand fully what due course means). So if the buyer is given a 10 year warranty on the house from the payee but the payee endorsed the note to a holder, the holder is not liable for the warranty the buyer must still pay. It didn't say whether or not the buyer could go after the payee for damages in the example they gave. I will have to do some further research on that.
