Practical Law Glossary Item w-001-4026 (Approx. 2 pages)
Glossary
Defeasance
The termination of a property interest on the satisfaction of stipulated conditions.
In the context of loan documentation for mortgage loans intended for securitization, defeasance is a term that describes a permitted manner of loan prepayment where the real property securing the loan is released from the lien of the mortgage and substituted with ratable securities that replicate the debt service generated by the mortgage loan.