Is a novation the same as an assignment?

No. A novation substitutes a new party with the consent of all affected parties and releases the original party from future obligations; an assignment transfers rights but may not extinguish the assignor’s liabilities.

When is notarization required?

Notarization is not universally required but may be necessary if the novation affects recorded property interests or where state law or contract requires a notarized acknowledgement; confirm with the relevant authority.

Can I use electronic signatures for a novation?

Yes. Electronic signatures are generally valid under the ESIGN Act (15 U.S.C. ch. 96) and UETA where adopted, provided intent, consent, attribution, and record retention requirements are met.

What happens if a counterparty refuses to consent?

Without the continuing counterparty’s consent, a true novation cannot occur; consider assignment alternatives if permitted by the contract, or negotiate terms to obtain written consent.

How should I record the novation internally?

Attach the signed novation to the original contract in your contract repository, update payment and performance records, and notify relevant operational teams and third parties.

Who should review the novation before signing?

Legal counsel should review for release language, governing law, and any third-party consent requirements; finance or credit teams should confirm consideration and payment routing changes.

Electronic Signature
Templates
Miscellaneous
Novation Agreement Template

Novation Agreement Template

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

NOVATION AGREEMENT

This Novation Agreement ("Agreement") is made and entered into as of by and between:

Continuing Party: ; and

Incoming Party (Assignee): .

WHEREAS

WHEREAS, on or about , a certain agreement described as: (the "Original Contract") was executed by ("Assignor") and the Continuing Party.

WHEREAS, Assignor desires to be released and discharged from its obligations under the Original Contract and the Incoming Party is willing to assume and perform all obligations and liabilities of Assignor under the Original Contract effective as of the Effective Date; and

WHEREAS, the Continuing Party agrees, subject to the terms and conditions of this Agreement, to discharge Assignor from future performance and accept performance by the Incoming Party in lieu of Assignor's performance.

NOVATION; ASSUMPTION; RELEASE

1. Novation and Assumption. As of the Effective Date, and in consideration of the mutual covenants herein, the Continuing Party accepts the novation and the Incoming Party hereby assumes and agrees to perform all obligations and liabilities of Assignor under the Original Contract arising on or after the Effective Date. From and after the Effective Date, the Incoming Party shall be bound by the terms of the Original Contract in every respect as if the Incoming Party were the original party thereto in place of Assignor.

2. Release of Assignor. In consideration of the Incoming Party's assumption of Assignor's obligations, the Continuing Party releases and forever discharges Assignor from any further liability under the Original Contract arising after the Effective Date. This release shall not affect any liabilities or claims of the Continuing Party that arose prior to the Effective Date.

CONSIDERATION

3. Consideration. The novation and obligations assumed by the Incoming Party are supported by adequate and valuable consideration consisting of: payment in the amount of and the mutual covenants contained herein. The Incoming Party shall make the stated payment to the Continuing Party in accordance with the Payment Terms below.

SCOPE OF WORK

Scope of Work / Obligations to be Assumed

PAYMENT TERMS

Payment Amount Payment Schedule / Milestones Late Fee

TERM AND TERMINATION

4. Term. The term of this Agreement shall commence on and shall terminate on unless earlier terminated in accordance with this Agreement.

5. Termination for Cause. Either party may terminate this Agreement upon written notice to the other party if the other party materially breaches any provision of this Agreement and fails to cure such breach within days after receipt of written notice specifying the breach.

CONFIDENTIALITY

6. Confidentiality. Each party shall keep confidential and shall not disclose to any third party any Confidential Information received from the other party in connection with the Original Contract or this Agreement except as required by law or with the disclosing party's prior written consent. "Confidential Information" means non-public information that is identified as confidential at the time of disclosure or that reasonably should be understood to be confidential.

Confidentiality Duration (years)

REPRESENTATIONS, WARRANTIES AND INDEMNITY

7. Representations and Warranties. Each party represents and warrants to the others that: (a) it has full power and authority to enter into this Agreement; (b) the execution and delivery of this Agreement and the performance of its obligations hereunder have been duly authorized; and (c) this Agreement constitutes a legal, valid and binding obligation enforceable in accordance with its terms.

8. Indemnity. The Incoming Party shall indemnify, defend and hold harmless the Continuing Party from and against any and all losses, liabilities, damages, costs and expenses (including reasonable attorneys' fees) arising from or relating to the Incoming Party's failure to perform the obligations assumed under this Agreement after the Effective Date.

CONTINUITY AND ENFORCEMENT

9. Continuity. Except as expressly modified by this Agreement, the terms and conditions of the Original Contract shall remain in full force and effect and shall apply to the Incoming Party in all respects. All references to Assignor in the Original Contract shall be deemed references to the Incoming Party with effect from the Effective Date.

NOTICES

10. Notices. All notices, requests, demands and other communications required or permitted hereunder shall be in writing and delivered to the parties at their respective addresses set forth below or at such other address as a party may designate by notice to the other party:

Continuing Party - Notice Address Incoming Party - Notice Address

GOVERNING LAW; MISCELLANEOUS

11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of , without regard to its conflict of laws principles.

12. Amendment. This Agreement may not be amended or modified except by an instrument in writing signed by the parties hereto.

13. Entire Agreement. This Agreement, together with the Original Contract as modified hereby and any documents expressly incorporated herein, constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, whether written or oral, relating to such subject matter.

14. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Signatures delivered by electronic transmission shall be binding for all purposes.

IN WITNESS WHEREOF, the parties hereto have executed this Novation Agreement as of the date first written above.

Continuing Party (Print Name):

By:

Date:

Incoming Party (Print Name):

By:

Date:

What a Novation Agreement Template Is and When to Use It

A Novation Agreement Template is a written contract that replaces one party in an existing agreement with a new party, transferring rights and obligations so the original party is released from future liability. Typical novations identify the transferor (outgoing party), the transferee (incoming party), and the non-transferring counterparty, reference the original agreement, state consideration or reason for the transfer, and set an effective date. Novation differs from assignment because novation requires the consent of all affected parties and expressly substitutes the new party in place of the original contracting party.

Why a Clear Novation Template Protects All Parties

A properly drafted novation reduces ambiguity about who holds contractual duties and rights after a transfer, preserves continuity of service or performance, and documents consent and release to avoid disputes.

Who Commonly Prepares or Signs a Novation Agreement

Parties and professionals who use novation templates vary by industry but share the need to document replacement of a contracting party with consent and release.

Corporate counsel and in-house legal teams managing mergers, acquisitions, or portfolio transfers
Lenders and loan servicers transferring servicing rights or whole loans
Real estate closing agents and property managers handling assignment replacements

Use the template when the original contract must remain in force with a substituted party and all original parties must acknowledge the substitution in writing.

Core Elements Every Professional Novation Template Should Include

A robust template makes the substitution explicit, documents consent and release, and provides execution mechanics so the transfer is legally effective and administrable.

Parties

Full legal names and entity types for transferor, transferee, and continuing counterparty, with registered addresses and organizational identifiers where applicable.

Recitals

Background language referencing the original contract, its date, and the reason for novation so the document context is clear for third parties and auditors.

Novation Clause

Clear operative language stating that the transferee replaces the transferor and acquires all rights and obligations under the referenced agreement from the effective date.

Release and Consent

Express release of the transferor from future liability and written consent by the continuing counterparty, eliminating ambiguity about ongoing obligations.

Consideration

Description of payment, credit, assumption of obligations, or other consideration that supports the novation under contract law principles.

Execution Details

Signature blocks, dates, witness or notary provisions if required, and a clause on governing law and dispute resolution to reduce future litigation risk.

Essential Information to Capture in the Template

Party Names: Full legal entity names

Addresses: Street, city, state, ZIP

Effective Date: MM/DD/YYYY

Original Contract: Reference title and date

Consideration: Amount or description

Signatures: Authorized signer names

Step-by-Step: How to Complete and Execute a Novation Agreement

Follow these sequential steps to prepare, obtain consent, and finalize a novation so the substitution is effective and auditable.

01

Gather Documents: Collect the original contract, entity records, and proof of authority
02

Draft Novation: Populate the template with party details and operative novation language
03

Obtain Consents: Secure written acceptance from the continuing counterparty and any required third parties
04

Execute and Record: Sign, notarize if needed, and file or distribute copies to stakeholders

How to Configure an Online Novation Workflow

Configure a digital workflow to collect signatures, optional notarization, and to produce an audit trail for compliance and recordkeeping.

Field	Configuration
Signature Method	Electronic signature with timestamp and audit trail
Authentication	Email link or SMS code; KBA for higher assurance
Notarization	Enable RON or in-person notarization where required
Retention	Automate storage and export to PDF/A for long-term records

Where to Send, File, or Register a Completed Novation

After execution, route the signed novation to all contracting parties, update internal contract registers, and record with third parties if required.

Deliver to Parties: Email signed copies to transferor, transferee, and counterparty
Update Contract File: Attach the novation to the original agreement in your repository
Notify Third Parties: Inform stakeholders such as lenders, insurers, or registries
Record if Needed: File with public offices when novation affects recorded interests

Technical Requirements for Digital Signing and eSubmission

Prepare the document and platform settings for reliable eSignature, optional remote notarization, and compliant storage.

File Formats: PDF and DOCX supported
Integrations: CRM and document storage connectors
Security: Audit trail and encryption

Choose a solution that supports secure PDF signing, audit trails, optional RON workflows, and integrations with systems such as Salesforce, NetSuite, Microsoft 365, Google Workspace, Box, or Procore for automated routing and storage.

Common Deadlines and Timing Considerations

Track deadlines for consent collection, effective date, and any filings that depend on the novation to avoid exposure or contract breaches.

Effective Date:

Date the novation takes effect; impacts obligations immediately

Consent Deadline:

Set a firm date to obtain all required consents

Third-Party Filing:

Record or notify within statutory or contractual timeframes

Payment Reassignment:

Update payment instructions before the effective date

Record Retention Start:

Start retention when novation is executed

Common Preparation Mistakes to Avoid

Failing to obtain explicit written consent from the continuing counterparty, which can render the substitution ineffective and leave the transferor liable
Using vague language about obligations or consideration, creating room for post-novation disputes over who must perform
Not updating related contracts, schedules, or payment instructions, resulting in practical failures to transfer duties or funds
Overlooking required notarization or registration when the novation affects recorded property or statutory rights

Potential Legal and Financial Risks of an Incorrect Novation

Enforceability Risk: Novation may be void

Residual Liability: Transferor may remain liable

Tax Consequences: Potential taxable transfer

Regulatory Noncompliance: Industry fines possible

Breach Claims: Counterparty disputes arise

Notary Failures: Invalid notarization invalidates act

Practical Novation Use Cases

Two common scenarios illustrate how a novation template is used to transfer contractual responsibility without recreating the original agreement.

Commercial Lease Transfer

A landlord and tenant agree to substitute a new tenant into an existing lease agreement

The landlord and new tenant sign to accept obligations
The novation attaches the original lease, records the effective date, and releases the outgoing tenant from future obligations while preserving lease continuity.

Loan Servicing Transfer

A lender transfers servicing rights to a third-party servicer under an existing loan servicing agreement

The borrower and transferee sign to acknowledge the servicer substitution
The novation specifies account handling, payment routing, and confirms the original loan terms remain unchanged while the servicer assumes operational duties.

Who Typically Signs and Who Should Review

Transferor — Corporate Counsel

Corporate counsel or authorized signatory of the transferor should execute and provide a certificate of authority; counsel confirms the transferor’s release and any internal approvals required by corporate governance.

Transferee — Business Officer

An authorized officer of the transferee signs to accept obligations and should confirm insurance, performance capacity, and any requisite governmental or counterparty consents in writing.

eSignature Pricing and Capability Snapshot for Executing Novations

Compare basic pricing and capabilities to select an eSignature provider that supports audit trails, optional notarization, bulk sends, and HIPAA where required.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	Varies by vendor	Varies by vendor	Varies by vendor	Varies by vendor
Bulk Send	Yes	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No

Frequently Asked Questions About the Novation Agreement Template

Answers to common questions about enforceability, signatures, notarization, and how novation differs from assignment.

Need help? Contact support

Is a novation the same as an assignment?
No. A novation substitutes a new party with the consent of all affected parties and releases the original party from future obligations; an assignment transfers rights but may not extinguish the assignor’s liabilities.
When is notarization required?
Notarization is not universally required but may be necessary if the novation affects recorded property interests or where state law or contract requires a notarized acknowledgement; confirm with the relevant authority.
Can I use electronic signatures for a novation?
Yes. Electronic signatures are generally valid under the ESIGN Act (15 U.S.C. ch. 96) and UETA where adopted, provided intent, consent, attribution, and record retention requirements are met.
What happens if a counterparty refuses to consent?
Without the continuing counterparty’s consent, a true novation cannot occur; consider assignment alternatives if permitted by the contract, or negotiate terms to obtain written consent.
How should I record the novation internally?
Attach the signed novation to the original contract in your contract repository, update payment and performance records, and notify relevant operational teams and third parties.
Who should review the novation before signing?
Legal counsel should review for release language, governing law, and any third-party consent requirements; finance or credit teams should confirm consideration and payment routing changes.

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