finance

release clause

A release clause is a provision, typically found in a blanket mortgage, that allows individual parcels to be released from the mortgage lien when the borrower pays a set portion of the loan. It is common in subdivision development, letting a developer sell lots one at a time with clear title. The clause states how much must be paid to release each parcel.

Exam tip
Release clause goes with blanket mortgage. If an exam describes a developer selling lots from one loan, look for this pairing.
Example
A developer with a blanket mortgage on 30 lots pays the lender $40,000 to release Lot 7 so it can be sold to a buyer free of the lien.

Related terms & state variants

Sources

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Last verified: 2026-10-23