REAL ESTATE GLOSSARY
Defeasance
Defeasance
A process substituting qualifying securities for real estate collateral to release a lien.
What does Defeasance mean?
A process substituting qualifying securities for real estate collateral to release a lien. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
Defeasance in context
A CMBS borrower may purchase government securities to defease a loan before selling the property.
Why it matters in financing
Defeasance can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related real estate terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.