Question

Under a partial release clause, a lender:

a. accelerates the loan if the security property is sold
b. declares the entire loan balance due in the event of default
c. imposes a penalty when part of the principal is repaid before it is due
d. removes the lien from part of the property when part of the debt has been paid

Answer 1

D. Removes the lien from part of the property when part of the debt has been paid. This clause is used in commercial loans to allow a developer to repay part of the debt to remove the lien on part of the property. It is negotiated for agreed-upon payments to free multiple parcels of property separately to encourage development.