Exam vocabulary · mortgage clause

What Is Defeasance Clause in Real Estate?

Definition

A defeasance clause obligates the lender to give up its claim on the property once the debt is paid in full, reconveying title in a title-theory state and releasing the lien in a lien-theory state. It is what makes the recorded satisfaction of mortgage a duty rather than a courtesy.

How the exam tests defeasance clause

These mirror the phrasing you will see on test day. Answer them, then read the explanation whether or not you got it right.

Defeasance Clause: exam questions1/1

Financing

Which clause obligates the lender to release its security interest once the debt has been paid in full?

score 0/0

Every defeasance clause question, answered

Every question above with its correct answer and the reasoning behind it. Read the explanations for the ones you answered correctly too. A lucky guess and knowing the rule look identical on a score report. These are sample questions from our larger bank.

1. Which clause obligates the lender to release its security interest once the debt has been paid in full?
- AAlienation clause
- BDefeasance clausecorrect
- CEscalation clause
- DAcceleration clause
Why: The defeasance clause defeats the lender’s interest at payoff and requires delivery of a satisfaction or reconveyance. Acceleration works in the opposite direction — it makes the entire balance due after a default.
Financing

Where defeasance clause sits in the exam vocabulary

Defeasance Clause is a mortgage clause, and so are acceleration clause, alienation clause and subordination. That matters more than it sounds: a multiple-choice item builds its wrong answers out of siblings like these, because they are the options that look plausible to someone who has learned the category but not the distinction. If defeasance clause appears as the correct answer, expect to see acceleration clause and alienation clause on the same screen.

Defeasance Clause does not stand on its own: it assumes you already know lien. Questions that look like they are testing defeasance clause are often really testing whether that idea is solid underneath it.

The exam most often tries to catch you by putting defeasance clause next to acceleration clause. Each of those is a real concept sitting close enough to be tempting, and the question usually turns on the single feature that separates them rather than on the definition of either one. Read the contrast, not the term.

Related exam terms

Tested alongside

Often confused with

Know this first

lien

Defeasance Clause belongs to the mortgage clause family of exam concepts. When it is solid, take the free real estate exam prep or browse the full real estate exam vocabulary.