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
In the US public-land survey terminology, range lines refer to two parallel north and south lines. In other words, range lines are north-south division lines used in the government’s ...
Acquired by adverse land use for a statutory period of time. ...
Inappropriate and possibly harmful use of land. For example, a factory located on the shore of a river discharges toxic pollutants into the waterway. ...
A sash window having two vertically moving sashes respectively offset by sash weights. Each sash closes a different part of the window. ...
Unintentional error. An example is a house that the seller wants $1,000,000 for but it is mistyped as $100,000. An error may be unilateral or mutual. Some types of errors are the basis to ...
Depicts the best way to allocate land to maximize usefulness and profitability. ...
Same as term financial institutions: Institutions acting as intermediaries between suppliers and users of money. The financial markets are where those wanting funds are matched with those ...
Contractual clause allowing one or both parties to terminate the agreement if a specified occurrence takes places. This is a cancellation clause, which allows the agreement to become null ...
Indicators reflecting future changes in economic conditions; referred to as the Composite Index of 11 Leading Indicators. This index indicates the direction of the economy in the next six ...
Have a question or comment?
We're here to help.