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Simple English definitions for legal terms
release clause
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A quick definition of release clause:
A release clause is a part of a mortgage agreement that allows the borrower to pay off a specific portion of the loan and obtain a release of the mortgage on that portion of the property. However, if the borrower is in default on any part of the mortgage, the lender may not allow a partial release.
A more thorough explanation:
A release clause is a provision in a mortgage that allows the borrower to obtain a release of a specific portion of the property from the mortgage upon paying a specific portion of the loan. This provision is commonly included in blanket mortgages.
For example, let's say a borrower has a blanket mortgage on a property that includes several buildings. The release clause in the mortgage allows the borrower to obtain a release of one of the buildings from the mortgage upon paying a specific portion of the loan. This can be useful if the borrower wants to sell one of the buildings but doesn't want to pay off the entire mortgage.
Another example would be if a borrower has a mortgage on a large piece of land that includes several parcels. The release clause in the mortgage allows the borrower to obtain a release of one of the parcels from the mortgage upon paying a specific portion of the loan. This can be useful if the borrower wants to sell one of the parcels but doesn't want to pay off the entire mortgage.
These examples illustrate how a release clause can be a useful tool for borrowers who want to sell a portion of their property without having to pay off the entire mortgage.