Sep 11, 2025 · What Is Defeasance? Defeasance is a financial strategy where a borrower nullifies debt by allocating adequate cash or bonds, removing it from the balance sheet.

Defeasance (or defeazance) (French: défaire, to undo), in law, is an instrument which defeats the force or operation of some other deed or estate; as distinguished from condition, that which in the same …

Dec 6, 2025 · Defeasance is a financial mechanism used to retire a debt obligation without physically paying off the underlying liability immediately. The strategy allows the borrowing entity to remove the …

What is Defeasance and How Does it Work? Defeasance refers to the replacement of the collateral of a loan with securities (generally fixed-rate government bonds) that will offer a lender an equivalent return.

Guide to Defeasance and its definition. We explain it with an example and compare it with yield maintenance and prepayment.

The meaning of DEFEASANCE is the termination of a property interest in accordance with stipulated conditions (as in a deed).

Jun 12, 2024 · What is defeasance? A defeasance clause is a provision in a commercial real estate loan agreement that lets a borrower replace the asset securing the loan with substitute …

Typically, defeasance is a process through which a lender’s claim on collateral is eliminated. The borrower replaces the collateral with another security that is relatively risk-free, such as Treasury …

What Is Defeasance? Defeasance is a financial term that refers to the process of setting aside assets or cash reserves to discharge financial obligations. It commonly involves prepayment or retirement of …

Defeasance requires reserving cash or bonds to meet the debt, which effectively cancels the obligation. To achieve this, borrowers replace the original collateral of a mortgage with securities, typically by …