Definition
A mortgage provision stating that the lender's title interest terminates once the loan is fully repaid. It's the legal version of 'when you pay me back, I promise to stop owning part of your house.'
Example Usage
Thanks to the defeasance clause, the bank released the lien immediately after our final mortgage payment cleared.
Origin
From Old French 'desfaire' meaning 'to undo,' established in medieval English property law
Fun Fact
In title theory states, the lender actually holds legal title to your property until the defeasance clause is triggered by full repayment.
Source: American Bar Association real property law documentation
Related Terms
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See “defeasance clause” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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