A more thorough explanation:

Defeasance is a legal term that means to cancel or annul something. It is often used in property law to describe the termination of an estate or status with a conditional limitation. This means that if a specific condition is fulfilled, the deed will be voided.

For example, let's say that John sells his house to Jane with a defeasance clause that states that if Jane fails to make her mortgage payments for three consecutive months, the sale will be voided and the house will revert back to John. In this case, the defeasance clause acts as a safeguard for John, ensuring that he will not lose his property if Jane fails to fulfill her obligations.

Another example of defeasance can be seen in a bond agreement. A bond issuer may set up a defeasance trust, which is a separate account that holds enough money to pay off the bondholders if the issuer defaults on the bond. This provides a level of security for the bondholders, as they know that they will be paid even if the issuer cannot fulfill their obligations.