Defeasance | Propertylogy

Defeasance

By on October 4, 2018

Defeasance refers to the process whereby the legal title of a property is transferred back to the borrower after full repayment of the loan.

It can exist as a defeasance fee in commercial mortgages which is a prepayment penalty that the borrower has to pay in the event of full repayment before the maturity of the loan.

A defeasance clause will also enable a borrower in default to redeem the property by paying the lender the full amount due.



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