What does a defeasance clause indicate regarding a mortgage?

A defeasance clause in a mortgage indicates that the borrower retains the title to the property until all payments are completely made. This clause provides assurance to the borrower that, upon fulfilling their financial obligations, they will gain full ownership without any encumbrances related to the mortgage.

When the borrower meets all payment terms specified in the mortgage agreement, the lender is required to release their claim on the property, effectively transferring the title back to the borrower free of the mortgage lien. This assurance is crucial because it clearly outlines the conditions under which the borrower can expect to regain full control and ownership of their property, and it fosters a sense of security in the financing arrangement.