Partial Release of Mortgage Clause
A Partial Release of Mortgage Clause is a provision in a mortgage agreement that allows for the release of a portion of the mortgaged property from the lien of the mortgage under specific conditions. This clause is particularly relevant in the context of development projects or when a borrower wishes to sell a part of the property while retaining the mortgage on the remainder.
When a borrower requests a partial release, they typically need to meet certain criteria stipulated in the mortgage agreement, such as the payment of a specified amount to the lender. Once the conditions are fulfilled, the lender will formally release the portion of the mortgage that corresponds to the property being sold or otherwise removed from the mortgage lien.
For example, consider a commercial property that is mortgaged and has several lots. If the property owner decides to sell one of the lots, they may request a partial release of mortgage from their lender. Upon payment of the agreed-upon amount, the lender will issue a release document, which clears the lot from the mortgage lien, allowing the owner to sell it unencumbered.
The inclusion of a partial release of mortgage clause can be advantageous for both borrowers and lenders. It provides flexibility for borrowers to manage their property assets while ensuring that lenders maintain their security interest in the remaining property. However, the specific terms and conditions can vary widely among different mortgage agreements, making it essential for borrowers to understand the implications of this clause before entering into a mortgage.
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