Alienation Clause
Definition of "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
Looking to understand what is Ginnie Mae? You’ve been hearing about it and knows not what it means. Let us help with the most succinct Ginnie Mae definition possible: Ginnie Mae is ...
The definition of a bedroom community, or commuter town in real estate is a unique type of community that merely uses their homes to sleep, while doing everything else offsite. In a bedroom ...
Governmental body that reviews property tax assessment procedures. ...
The term’s abstract of title definition is the recorded summary of a property’s history. Abstracts of title can be used to determine former and present ownerships of any ...
Keeps something under control, such as water and sand. It blocks natural flow and settling of earth. It performs the same function as a dam would for water. ...
The term straight note in real estate is also known as a promissory note. A straight note is defined as a loan agreement that generally requires payments of interest only over the term of ...
In everyday discourse, a merger defines the combination of two entities, be it real estate or two companies, into a single and legit one. We should make a difference between a merger and ...
An administrator appointed by the government or the courts to administer the laws relating to a government agency or court. A commissioner is a part of a government or court commission. ...
A written contract of a group of property owners, typically condominium owners, describing their joint ownership obligations and rights. The association agreement usually allows members to ...
Have a question or comment?
We're here to help.