§ 554.3302

554.3302 Holder in due course. 1. Subject to subsection 3 and section 554.3106, subsection 4, 'holder in due course' means the holder of an instrument if: a. the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call intoquestion its authenticity; and b. the holder took the instrument for value, in good faith, without notice that the instrument is overdue or has been dishonored or that there is an uncured default withrespect to payment of another instrument issued as part of the same series, without noticethat the instrument contains an unauthorized signature or has been altered, without noticeof any claim to the instrument described in section 554.3306, and without notice that anyparty has a defense or claim in recoupment described in section 554.3305, subsection 1. 2. Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection 1, but discharge is effective against a person whobecame a holder in due course with notice of the discharge.

r than discharge in an insolvency proceeding, is not notice of a defense under subsection 1, but discharge is effective against a person whobecame a holder in due course with notice of the discharge. Public filing or recording of adocument does not of itself constitute notice of a defense, claim in recoupment, or claim tothe instrument. 3. Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an instrument takenby legal process or by purchase in an execution, bankruptcy, or creditor’s sale or similarproceeding, by purchase as part of a bulk transaction not in ordinary course of business ofthe transferor, or as the successor in interest to an estate or other organization. 4. If, under section 554.3303, subsection 1, paragraph 'a', the promise of performance that is the consideration for an instrument has been partially performed, the holder mayassert rights as a holder in due course of the instrument only to the fraction of the amountpayable under the instrument equal to the value of the partial performance divided by thevalue of the promised performance. 5.

holder in due course of the instrument only to the fraction of the amountpayable under the instrument equal to the value of the partial performance divided by thevalue of the promised performance. 5. If the person entitled to enforce an instrument has only a security interest in the instrument and the person obliged to pay the instrument has a defense, claim in recoupment,or claim to the instrument that may be asserted against the person who granted the securityinterest, the person entitled to enforce the instrument may assert rights as a holder in duecourse only to an amount payable under the instrument which, at the time of enforcementof the instrument, does not exceed the amount of the unpaid obligation secured. 6. To be effective, notice must be received at a time and in a manner that gives a reasonable opportunity to act on it. 7. This section is subject to any law limiting status as a holder in due course in particular classes of transactions. 94 Acts, ch 1167, §37, 121, 122; 2013 Acts, ch 30, §261Referred to in §523G.7, 554.3103, 554.4104, 554.4205, 554.4211, 554.9102, 554D.118 Sat Dec 23 01:56:28 2023 Iowa Code 2024, Section 554.3302 (25, 0)