Defeasance

n. nullification

Defeasance, or defeazance (Fr. défaire, to undo), in law, is an instrument which defeats the force or operation of some other deed or estate; as distinguished from condition, that which in the same deed is called a condition is a defeasance in another deed. "Defeasance is a clause within a loan document which allows the exchange of one type of collateral, such as real estate, for, another type of collateral such as a portfolio of United States Treasury Securities." [1]A defeasance should recite the deed to be defeated and its date, and it must be made between the same parties as are interested in the deed to which it is collateral. It must be of a thing defeasible, and all the conditions must be strictly carried out before the defeasance can be consummated.
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(n.)
A rendering null or void.
  

(n.)
A defeat; an overthrow.
  

(n.)
A condition, relating to a deed, which being performed, the deed is defeated or rendered void; or a collateral deed, made at the same time with a feoffment, or other conveyance, containing conditions, on the performance of which the estate then created may be defeated.
  

Practice whereby the borrower sets aside cash or bonds sufficient to service the borrower's debt. Both the borrower's debt and the offsetting cash or bonds are removed from the balance sheet.

A side-contract which contains a condition which, if realized, could defeat the main contract. - (read more on Defeasance)