Posted on: 20th Mar, 2007 05:53 am
what is a defeasance clause? is it related to mortagage? should a loan contract have such a clause.
It is a clause on a mortgage loan contract which promises the borrower that he shall get back title to the property after he has paid off the loan entirely.
Such a clause is not found in mortgages which are based on the lien theory. And most of the states nowadays follow the lien theory.
As per lien theory, a mortgage creates a lien for the lender on property. This lien gives the lender right to property possession only after foreclosure.
Aaron Russo
As per lien theory, a mortgage creates a lien for the lender on property. This lien gives the lender right to property possession only after foreclosure.
Aaron Russo