Contracts
What is a 'release clause' in a Hawaii blanket mortgage and why is it important for subdivision developers?
AA. A clause allowing the mortgagor to release all obligations under the loan
BB. A provision allowing individual parcels to be released from the blanket mortgage upon payment of a specified amount, enabling individual lot sales✓ Correct
CC. A clause releasing the lender from liability if a parcel is condemned
DD. A tenant's right to terminate a lease with 30 days' notice
Explanation
A release clause in a blanket mortgage allows the developer to sell individual lots and have them released from the mortgage lien upon paying the lender a specified release price per lot. Without this clause, a buyer purchasing one lot from the developer couldn't get clear title because the entire subdivision is encumbered by one mortgage.
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