In real estate, a Defeasance Clause is a provision in a mortgage or deed of trust that gives the borrower (mortgagor) the right to regain full title to the property once the loan obligations have been fully satisfied. This clause states that when the borrower pays the debt according to the terms of the loan, including principal, interest, and any other required costs, the lender’s lien on the property becomes void.
The defeasance clause protects the borrower by ensuring that the mortgage or deed of trust exists only as long as the debt remains unpaid. Upon full repayment, the lender must release the lien (typically through a satisfaction of mortgage or reconveyance) thereby restoring the borrower’s title free of the security interest. This clause reinforces the principle that the property is pledged solely as security for the loan, not as a permanent transfer of ownership.
