Definition
Defeasance has two closely related but distinct uses in law.
1. As a document: A collateral deed or instrument that defeats, voids, or undoes the operation of another deed or conveyance. A defeasance sets out conditions such that, upon their performance, the primary deed is rendered null and of no effect. The classic example is a mortgage defeasance: a borrower conveys property to a lender, with a separate defeasance instrument providing that the conveyance becomes void upon repayment of the debt. The defeasance is the mechanism by which the borrower reclaims the estate.
2. As a legal effect: The act or result of defeating, voiding, or annulling a legal instrument, estate, or obligation. In this sense, defeasance describes what happens — the undoing — rather than the document that causes it. An estate subject to defeasance is one that may be defeated upon the occurrence of a condition.
The distinction between a defeasance and a condition turns on location: when the defeating language appears in the same deed as the grant, it is called a condition; when it appears in a separate, collateral instrument, it is called a defeasance. Both produce the same functional result — the potential undoing of the estate — but the legal rules governing each have historically differed.
Common Language
Modern common usage (Wiktionary): Destruction, defeat, overthrow; the rendering void of a contract or deed; an annulment or abrogation.
Historical common usage (Webster's 1913): A defeat or overthrow (noted as obsolete in that sense); also, a condition in a deed rendering it void upon performance, or a collateral deed containing such conditions.
The common meaning tracks the legal meaning closely here, but only at a surface level. Ordinary usage captures the idea of "undoing" without conveying the structural distinction — defeasance as a specific instrument versus defeasance as an effect — that matters in legal research. A researcher who understands defeasance only as "annulment" may miss that historical sources are often specifically describing a deed, with formal requirements, not merely a contractual mechanism for avoidance.
Common Confusion
Defeasance is often conflated with condition subsequent. A condition subsequent is language within a deed that may defeat an estate upon breach — it is embedded in the conveyancing instrument itself. A defeasance is a separate, collateral document accomplishing a similar result. The distinction was technically important at common law: a freehold estate created by feoffment could not be defeated by a later defeasance unless the defeasance was part of the original transaction. This rule does not apply to conditions written into the original deed. Modern usage, particularly in finance, has further blurred the term; see WHY IT MATTERS IN RESEARCH below.
Recognized Forms
/SUBTYPES
1. Mortgage defeasance: The original and most familiar form. A mortgagor conveys the legal estate to the mortgagee; the defeasance clause (historically in a separate instrument, later incorporated into the mortgage deed itself) provides that the conveyance becomes void upon repayment. This is the foundation of the common law mortgage and the source of equity's development of the equity of redemption.
2. Bond/financial defeasance: In modern finance and municipal bond practice, defeasance refers to a process by which a borrower sets aside sufficient funds — typically in escrow, invested in government securities — to satisfy a debt obligation, thereby removing the debt from the balance sheet and effectively discharging the lender's security interest. This is a creature of contract and finance law, not common law conveyancing, but it borrows the term directly.
3. Defeasance of recognizances and obligations: Historical sources treat defeasance as applicable not only to deeds of conveyance but to bonds, recognizances, and other obligations. The obligor's performance of the specified condition defeats the obligation.
Why It Matters in Research
Historical sources describe defeasance primarily in the conveyancing context — feoffments, common law mortgages, and freehold estates. Researchers working in property law history will find the term used almost exclusively in this sense through the nineteenth century. The modern financial use (bond defeasance, commercial real estate loan defeasance) is a twentieth-century development and will not appear in older dictionary or treatise sources under this heading.
The technical rule that a defeasance must be contemporaneous with the original deed (for executed transactions) versus permissibly subsequent (for executory obligations) is flagged in Bouvier and Rapalje but can be easy to miss. This timing rule affected whether a defeasance was legally operative at common law and is relevant when interpreting historical instruments.
Researchers working on defeasible estates in property law should note that the encyclopedia treatment of defeasible fees (determinable fees, fees subject to condition subsequent, fees subject to executory limitation) is the natural companion to this entry. The defeasance mechanism is what makes a fee defeasible; understanding defeasance clarifies how those estates are structured and undone.
In mortgage history research, the equity of redemption developed precisely because courts of equity refused to allow strict enforcement of defeasance conditions — specifically, the rule that failure to repay on the exact date stated in the defeasance permanently defeated the mortgagor's right to reclaim. Equity's intervention produced the modern mortgage. The term defeasance thus sits at the origin point of mortgage law.
Jurisdictional variation in modern financial defeasance is significant: the requirements for a valid defeasance of a commercial mortgage loan (sufficient collateral, lender consent, yield maintenance) are governed by contract and vary by instrument, not by a uniform legal rule.
Historical Dictionary Support
The five source dictionaries agree on the core definition with minor variation in emphasis. Black's (both editions) and Bouvier define defeasance primarily as the collateral instrument and preserve the condition/defeasance distinction based on whether the defeating language appears in the same or a separate deed. Rapalje and Lawrence note the Norman-French origin and the restriction on common law conveyances — that a feoffment could not be defeated by a subsequent defeasance — which is a historically significant limitation neither Black's edition fully develops. Anderson's is the most expansive, noting both recognized uses (the document and the legal effect) and extending the concept to constitutional rights through the related term indefeasible, which the other dictionaries do not connect as directly.
Webster's 1913 correctly identifies the obsolete general meaning (defeat/overthrow) alongside the legal meaning, providing useful confirmation that the term's legal sense was already the dominant one by the early twentieth century.
None of the historical sources adequately anticipates the modern financial defeasance context. Researchers should treat the historical entries as authoritative for conveyancing law through the nineteenth century and consult modern commercial law and finance sources for the bond and loan defeasance context.
Jurisdictional Note
The common law rules governing defeasance — particularly the requirement that defeasance of an executed freehold be part of the original transaction — were English rules that American jurisdictions inherited but modified unevenly. Modern defeasance in commercial lending is entirely contractual and follows the terms of individual loan documents rather than any uniform state rule. Researchers should not assume historical common law defeasance doctrine controls modern commercial transactions.
Encyclopedia Cross-Reference
Estates in Land — Defeasible Fees (Determinable, Subject to Condition Subsequent, Subject to Executory Limitation) (The Law Mind Property Law Encyclopedia)