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
material placed on the outside surface of a structure such as aluminum or vinyl siding on a house. It is cost-efficient because it eliminates the need for repeated painting. Siding provides ...
Founded in 1930 and located in Centerville, UT, NARELLO has 700 members consisting of state administrators managing real estate licensing laws. It seeks to improve real estate licensing ...
There’s a lot of confusion regarding the hazard insurance definition. Many people think it’s a synonym for homeowners insurance but they’re wrong. Hazard insurance is ...
We all know what income is or what gross income means, but what is adjusted gross income? When a company calculates its income to determine their taxable income, they take the gross income ...
Regional area from which a particular product or service can expect its greatest demand. For example, a retail department store expects to attract shoppers from a market area having a ...
Owner has rights to water on his land. He also has a reasonable privilege to water adjacent to his property that flows through it or abutting it. ...
First right of a party, usually a creditor, to hold, keep possession of, or control the property of another to pay a debt, duty, or obligation. ...
Claude in a contract, title, or mortgage that is subject to being annulled, repealed, or revoked upon the satisfaction of a claim or completion of a future event. ...
Supplementary narrow pathway, such as to a building. ...
Have a question or comment?
We're here to help.