Defeasance is the process of rendering a condition in a deed or contract null and void. The contractual provision containing the condition may be referred to as a defeasance clause. As an example, defeasance of bonds refers to when the debtor secured the repayment of the bond with a cash or cash equivalent fund in a sufficient amount to repay the bond; the idea is that the fund essentially covers the repayment. In the context of real estate, defeasance occurs when a grantor transfers land on the condition that an event occur, and the event does not occur.
[Last updated in September of 2021 by the Wex Definitions Team]