answersLogoWhite

0

A defeasance clause is a provision in a loan or mortgage agreement that allows for the cancellation of the borrower's obligation to repay the debt, typically upon the establishment of a separate fund to pay off the loan. This clause is commonly used in commercial real estate financing, where the borrower can set aside sufficient funds in an escrow account to cover the remaining loan balance. Once the conditions of the clause are met, the lender's claim against the property is released. This mechanism provides a way for borrowers to manage their liabilities and provides security for lenders.

User Avatar

AnswerBot

1mo ago

What else can I help you with?

Related Questions

How do you report a loss on bond defeasance?

To report a loss on bond defeasance, you would first need to calculate the difference between the carrying amount of the bond and the amount paid to defease it. This difference would be recognized as a loss in the income statement in the period of defeasance. This loss would be accounted for as a non-operating expense.


What is a defeasance?

A condition of termination of an estate which automatically brings the estate to an end if the condition is satisfied


Is a defeasance notice something good?

A defeasance notice is generally considered a positive development for borrowers. It indicates that a loan has been paid off or that the borrower has fulfilled the conditions to release the collateral backing the loan. In real estate transactions, it signifies the end of a mortgage obligation, allowing the borrower greater financial freedom and the ability to move forward without the encumbrance of debt.


What is a notice of defeasance?

Technically, it's a substitution of collateralTwo common situation:With regards to bonds:The issuer places government backed securities in escrow, sufficient enough to repay all interest and principal on the initial bonds. The bond buyers are issued a notice of defeasance informing them that their bonds are now backed by the securities in escrow. This releases the issuer from any further obligation.With regards to mortgagesThe mortagage borrower replaces the original collateral (the home) with some other collateral. The bank then receives a notice of defeasance informing them that their original loan is now secured with something else, allowing the lender to do what he wants with the house


The what is also known as the elastic clause?

Another name for the Elastic Clause is the Necessary and Proper Clause.


What is an objective clause?

An objective clause is a clause which is like a learning objective but this is the objective for an clause


What is the other name of your relative clause?

Restrictive Clause is the other name of relative clause..


What clause allows congress to expand its power?

full credit


An adjective clause is a clause that?

a dependent clause that modifies a noun


What kind of clause contains a subject and a predicate?

It can be an independent clause or a dependent clause. It is an independent clause if does not have a word at the beginning like "but" or "because". If there is a word like this at the beginning of the clause, it is a dependent clause.


What is an insubordinate clause?

An insubordinate clause is just another word for an Independent clause. A subordinate clause is just another word for a Dependent clause. An Independent clause is a sentence that can stand by itself and a dependent clause can't stand by itself.


What is another word for main clause?

An alternative term for a main clause is an independent clause.