An instrument that accompanies a BOND, recognizance, or judgment and contains a condition that, when performed, defeats it.

a deed which acted to cancel a recognizance of a statute staple

An instrument which defeats the force of some other instrument, such as mortgage, etc.

A clause in a deed, lease, will or other 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.

"The rendering null and void of an act, condition, right, etc.; a condition upon the performance of which a deed is defeated or made void." Oxford

A side-contract containing a condition which, if realized, could defeat the main contract. The common English usage of the word "defeasance" has also become acceptable in law, referring to a contract that is susceptible to being declared void as in "immoral contracts are susceptible to defeasance."

A clause in a mortgage that negates an obligation upon the performance of certain acts or conditions within the agreement.

Defeasance, or defeazance (Fr. défaire, to undo), in law, is an instrument which defeats the force or operation of some other deed or estate; as distinguished from condition, that which in the same deed is called a condition is a defeasance in another deed.

A pre-payment penalty utilized by many conduit lenders. This permits the borrower (debtor) to offset and eliminate the liability with the purchase of (usually) government securities in a quantity determined by the lender. The goal of the lender is to maintain the yield provided by the loan that is being paid off. EFFECTIVE GROSS INCOME Gross income of a property if fully rented less an allowance for estimated vacancies. Please note, if property occupied at less than 100%, but at accepted area occupancy level, Gross Income and Effective Gross Income would be the same.

Arrangements whereby a set of debt liabilities are held against a set of assets with closely matching and offsetting cost and risk characteristics.

In corporate finance it is generally the discharge of old, low-rate debt without repayment prior to maturity. The corporation replaces it with newly issued securities with a lower face value buy paying higher interest or having a higher market value. The technique can result in tax and balance sheet advantages.

the lender replaces the cash flow of the original loan with actual treasury securities. The borrower repays the lender enough money to buy these securities and the lender buys a combination of bonds to replace the yield lost when a loan is paid off. Once these bonds are purchased the lender releases their collateral in the property.

The setting aside by a borrower of cash or bonds sufficient to service the borrower's debt. Both the borrower's debt and the offsetting cash or bonds are removed from the balance sheet.

a clause in a mortgage that gives the borrower the right to prepay a commercial mortgage by purchasing US Treasuries in an escrow account to pay off ongoing debt service.

A form of prepayment penalty for which the borrower is required to purchase and deposit with the lender substitute collateral, such as a Treasury security that matches the principal and interest payments of the prepaid loan and thereby sufficiently services the debt of the prepaid loan.

Used in connection with a bond issue, describes the amount of risk faced by holders of the bonds. A fully defeased issue means that principal and interest are at complete risk of loss

US Treasuries or other securities of a federally supervised or controlled instrumentality replace real property as Note's collateral.

In defeasance, the lender replaces the cash flows of the original loan with actual Treasury Securities. The borrower pays the lender enough money to buy these securities and the lender goes out in the bond market and buys the right combination of bonds. After this is done, and the lender has a security interest in the treasuries, the property is released as collateral for the loan and the treasuries become the new loan collateral.