What is the purpose of the defeasance clause?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $25.99Unlock all

Study for the Burk Baker National Test. Use flashcards and multiple choice questions with hints and explanations to prepare effectively. Get ready for your exam!

Multiple Choice

What is the purpose of the defeasance clause?

Explanation:
The defeasance clause is about tying the loan document to the property’s security instrument. It creates a direct link between the promissory note (the debt) and the mortgage or deed of trust (the lien on the property). This means the lien serves as security for the note, and when the debt is fully paid, the clause provides for the release of the lien. In short, the clause ensures the two instruments work together as one secured obligation and that paying off the debt results in removing the mortgage lien from the property.

The defeasance clause is about tying the loan document to the property’s security instrument. It creates a direct link between the promissory note (the debt) and the mortgage or deed of trust (the lien on the property). This means the lien serves as security for the note, and when the debt is fully paid, the clause provides for the release of the lien. In short, the clause ensures the two instruments work together as one secured obligation and that paying off the debt results in removing the mortgage lien from the property.

More Multiple Choice Questions
Subscribe

Get the latest from Passetra

You can unsubscribe at any time. Read our privacy policy