Define: Defeasance

Defeasance is a legal term referring to the act of nullifying or cancelling a contract, deed, or legal instrument by the introduction of new terms or conditions that render the original agreement void or ineffective. In the context of real estate, defeasance often involves the use of a defeasance clause in a mortgage agreement, where the borrower repays the loan in full and the lender releases the mortgage lien upon satisfaction of certain conditions. This typically occurs when the borrower refinances the mortgage or pays off the loan early. Once the conditions of defeasance are met, the original mortgage agreement is discharged, and the borrower obtains clear title to the property. Defeasance can also occur in other legal contexts, such as contracts and leases, where parties may agree to terminate or modify their agreements by mutual consent or through legal proceedings.

A clause in a deed, lease, will or another legal document that completely or partially negates the document if a certain condition occurs or fails to occur. Defeasance also means the act of rendering something null and void. For example, a will may provide that a gift of property is defeasable — that is, it will be void — if the beneficiary fails to marry before the willmaker’s death.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 29th March, 2024.