Code of Alabama

Ala. Code § 7-3-203 (2026)

Transfer of Instrument; Rights Acquired by Transfer.

✓ official Alabama Legislature (ALISON) text, current July 2026

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(a) An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.

(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.

(c) Unless otherwise agreed, if an instrument is transferred for value and the transferee does not become a holder because of lack of indorsement by the transferor, the transferee has a specifically enforceable right to the unqualified indorsement of the transferor, but negotiation of the instrument does not occur until the indorsement is made.

(d) If a transferor purports to transfer less than the entire instrument, negotiation of the instrument does not occur. The transferee obtains no rights under this article and has only the rights of a partial assignee.

(Acts 1995, No. 95-668, p. 1381, §1.)

Notes of Decisions

Cited in 2 cases, 2007–2015 · leading case: Atl. Nat. Trust, LLC v. McNamee, 984 So. 2d 375 (Ala. 2007).

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Atl. Nat. Trust, LLC v. McNamee, 984 So. 2d 375 (Ala. 2007). · cites it 5× “For example, Atlantic National cites § 7-3-203, which provides that the transfer of a negotiable instrument vests in the transferee all of the transferor's rights in the instrument, including the right to enforce the instrument.”

Smalls v. Wells Fargo Bank, N.A., 180 So. 3d 910 (Ala. Civ. App. 2015). · cites it 2× “” Official Comment, § 7-3-203, Ala.Code 1975. Smalls argues that the materials submitted by Wells Fargo failed to establish that MERS had the authority to assign the rights in the mortgage and the note, including the right to foreclose on the property, to Wells Fargo.”

— Ala. Code § 7-3-203(b) — 1 case

Smalls v. Wells Fargo Bank, N.A., 180 So. 3d 910 (Ala. Civ. App. 2015). “” Official Comment, § 7-3-203, Ala.Code 1975. Smalls argues that the materials submitted by Wells Fargo failed to establish that MERS had the authority to assign the rights in the mortgage and the note, including the right to foreclose on the property, to Wells Fargo.”

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