Alienation Clause
The definition of alienation clause is the transfer or sale of a particular property or asset that can be applied once the owner has no more financial obligations to said property or asset. The most often use for the term alienation clause is in financial or insurance contracts as well as mortgage deals and property insurance contracts.
Sometimes, the possibility of a real estate Alienation can be stipulated in a contract, either allowing or forbidding it to happen. Whenever that happens, it’s referred to it by parties as “the alienation clause”.
Alienation Clause in Mortgages
These can be quite common in the mortgage industry, and mortgage contracts usually have the clause stipulated, and lenders include them for residential and commercial properties. With the alienation clause, the lender can make sure that the payments are respected and fully repaid. The alienation clause covers the lender if the property is sold or transferred to someone else because the revenue from the sale will settle the mortgage balance.
If the alienation clause is not stipulated in the mortgage agreement the owner might transfer or sell the property along with the mortgage debt to a new owner in something that is called an assumable mortgage contract.
Alienation Clause in Insurance
Property insurance for both commercial and residential properties also have an alienation clause mentioned in their contracts. In the case of property insurance, the alienation clause absolves the account holder from any future payments in case the property is sold or transferred to someone else. Once the account holder, original owner, is acquitted of payments, the insurance is closed, and the new owner must purchase a new insurance in their own name for the property.
So, when you hear someone talking about a real estate alienation clause, know that person is mentioning the part of the contract that talks about the right to transfer property from one person to another.
Real Estate Tips:
Use our real estate Glossary Terms and get your knowledge up to date!
Want to find the best local agents? The OFFICIAL Real Estate Agent Directory® is the best way to go.
Popular Real Estate Terms
Failure or refusal to perform a specified action. The failure to fulfill contractually agreed upon terms or actions. Nonperformance creates a liability which can enable a judicial damage ...
Legal instrument permitting one to grant others general or specific powers for administering their finances. ...
The meaning of a development impact fee or impact fee defines a one-time cost the local government imposes on a brand new or planned development project (regularly on a property developer.) ...
Warm air heating system where ducts are located in the concrete slab of a building constructed without a basement. As the name implies, a perimeter heating system is located around the ...
Everyone is aware of the perplexing complexities of a real estate transaction. Enter Opendoor, a company that aims to simplify this experience. If you're a house hunter, seller, real estate ...
House that can be bought at a low price because it is in poor condition. A buyer who is handy may find it attractive because he can personally make the needed repairs without hiring others. ...
(1) Methods that involve discounting the future cash flows generated by an income property. These techniques are used primarily for valuation. (2) Methods of selecting and ranking ...
A method widely used for evaluating real estate projects. Under the net present value method, the present value (PV) of all cash inflows from the project is compared against the initial ...
Metal or wood channel attached immediately below or along the eaves of a building for the purpose of channeling rainwater away from the structure. The gutter prevents rain runoff from ...
Have a question or comment?
We're here to help.