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
Written agreement in which the lessee pays rent to the lessor for the use of real property for a stated time period. An example is the tenant's rental of an apartment or office space. ...
Measure of the value of all goods and services produced by the economy within its boundaries and is the nation's broadest gauge of economic health. GDA is often a measure of the state of ...
Board used when connected as a floor. It may also be used as a strip in a wall or door. ...
Restraining a person or business from denying an appropriate conveyance of property evidenced by a deed has given. ...
(1) Reconciling the records to show agreement. (2) Agreement of the records to physical amounts. ...
The term after-tax rate of return calculates an investor’s net return after income taxes. The calculation is used by many businesses and investors to determine their real earnings. ...
Monitoring and administrating a mortgage lien after it has been made. This may include monthly payments, record keeping, handing tax and insurance record, and foreclosure of property. A ...
Schedule which is part of Form 1040 showing income or loss from real estate transactions including net rental income (rental revenue less rental expenses). ...
The definition of acquisition cost in real estate is the total cost recorded by a company or individual pertinent to the purchasing of a property. This is the entire amount written down in ...
Have a question or comment?
We're here to help.