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Simple English definitions for legal terms
composition deed
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A quick definition of composition deed:
A composition deed is a written agreement between someone who owes money (a debtor) and someone they owe money to (a creditor). The agreement outlines how the debt will be discharged or adjusted. A deed is a legal document that can be used to convey property or create an obligation. It must be signed, sealed, and delivered. There are many different types of deeds, including absolute deeds, bargain-and-sale deeds, and gift deeds. A deed of trust is a type of deed that is used to secure a loan. It conveys title to real property to a trustee until the loan is repaid.A more thorough explanation:
A composition deed is a type of deed that reflects an agreement between a debtor and a creditor to discharge or adjust a debt. For example, if a debtor owes a creditor $10,000 but cannot pay the full amount, they may enter into a composition deed to settle the debt for a lower amount, such as $5,000.
One example of a composition deed is when a business is struggling financially and enters into an agreement with its creditors to pay a portion of its debts over time. The composition deed outlines the terms of the agreement and how the payments will be made.
Another example is when an individual owes money to multiple creditors and enters into a composition deed to consolidate the debts and make a single payment to all creditors.