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 a principal gent transaction or contract where a third party knows the name of the principal the agent represents. This is a typical setting in real estate situations. In this ...
Homeowner’s insurance is a kind of property insurance that covers risks commonly encountered by homeowners.There are several kinds of homeowner’s insurance ...
A loan in which the entire charge is subtracted up front from the face value of a loan. The proceeds received are the face value of the loan less this deduction, which increases the ...
In real estate, the term "preamble" refers to an introductory statement that outlines the fundamental principles and goals guiding the industry's practices. Specifically, in the National ...
Last installment payment, substantially greater than the previous installment payments. The unpaid balance of a long-term loan is paid off in a lump sum at the end of the loan term. ...
Main structural support beam. A girder is made of steel, reinforced concrete, or timber. It is designed to support loads at different points along its length. ...
System for listing recorded documents affecting a particular tract of land. ...
A shallow yet funny definition of a tax specialist is someone who loved math since 1st grade. He or she has an elephant’s memory and is always up to date with the regulations and ...
An activity by a property owner annoys or seriously disturbs other property owners making it discomforting to use their own property. A wide range of activities can be classified as ...
Have a question or comment?
We're here to help.