The government could also make an immediate and substantial difference simply by addressing what's called the defeasance of tax-exempt debt.
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A penal bond with conditional defeasance combined in one document the bond (the promise to pay a specified amount of money) with the contractual obligation. It did this in what the historian Brian Simpson called a ‘topsy-turvy’ fashion by printing the bond on the front of the document and the condition, whose performance by the obligor would render the bond void (referred to as the indenture of defeasance), on the back.Biancalana, Joseph, “The Development of the Penal Bond with Conditional Defeasance,” 26 J. Legal His. 103 (2005).
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It was not a Mortgage of 1606, but a defeasance (the annulment) dated 1620 of the 1602 deed. See www.wingfield.org sub "Virginia's Founder".
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If the condition upon which a future interest depends is precedent, the interest is contingent; if the condition is subsequent, the interest is vested, subject to defeasance. Anno: 131 ALR 712.
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Defeasance from collateral: Mulcahy v. Fenton Sub Parcel D, LLC, 2009 WL 2842011, (Minn. Dist. Ct. June 18, 2009), aff’d by 2010 WL 4181263, 2010 Minn. App. Unpub. LEXIS 1066 (Minn.
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Additionally, foreign entities, especially Chinese firms, had reined in their investment in New York real estate following a rapid pace of acquisitions in 2014 through 2016. All three of the final bidders insisted that American Realty Capital pay off the mortgage before they would purchase the building, a request which would have cost the company over $116 million in defeasance costs.
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Edith G. Henderson, "Relief from Bonds in the English Chancery: Mid-Sixteenth Century," 18 Am. J. Legal Hist. 298, 300 (1974). A simple bond can properly be considered a penal bond if it calls for the payment of a sum that is punitive in relation to the damages that would be caused by nonperformance. Historically, the most significant type of penal bond was the penal bond with conditional defeasance.
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The Debtors Act 1869 contained various provisions for making known to the debtor the extent of the liability incurred by him, among others that the warrant must be executed in the presence of a solicitor named by the debtor, and that it and the defeasance must be written on the same paper. A warrant of attorney was required to be duly stamped, generally as a mortgage, and to be registered as a judgment in the central office of the Supreme Court.
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In prior English law, a warrant of attorney was a security authorizing a solicitor to collect a debt on behalf of a creditor. It is now subsumed in the general power of attorney. A warrant of attorney was a security for money in the form of an authority to a solicitor named by a creditor, empowering him to sign judgment in an action against the debtor for the sum due, with a defeasance—a clause that the warrant shall not be put into force in case of due payment of the money secured. It was often used as a collateral security, either for the payment of an annuity or with mortgages, in order that the mortgagee, by entering up judgment, might obtain priority in the administration of the assets of the mortgagor.
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However, the royal courts increasingly did not respect shifting fees since there was no livery of seisin (i.e., no formal conveyance), nor did they recognize that tenure could be enlarged,The Jersey Law Commission, Consultation Paper: Security on Immovable Property, (8), [pdf], p. 2. so by the 14th century the simple gage for years was invalid in England (and Scotland and the near continentIn Scots law and on the continent, the prohibition against pacta commissoria is due to the reintroduction of Roman law.). The solution was to merge the latter-day wadset and gage for years into a single transaction embodied in two instruments: (1) the absolute conveyance (the charter) in fee or for years to the lender; (2) an indenture or bond (the defeasance) reciting the loan and providing that if it was repaid the land would reinvest in the borrower, but if not the lender would retain title.
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Although penal bonds have not been used for hundreds of years, their influence on English jurisprudence continued through the development of the common law rules in relation to penalty clauses.Professor A. W. B. Simpson, The penal bond with conditional defeasance (1966) 82 LQR 392, 418-419 During their review of this area of the law in Cavendish Square Holding BV v Talal El Makdessi the Supreme Court reviewed the relevant history and its effect on subsequent jurisprudence (noting that "[t]he penalty rule in England is an ancient, haphazardly constructed edifice which has not weathered well".Makdessi [2015] UKSC 67, at para 3. With the decline of the use of defeasible bonds the procedural mechanics developed in case law and Administration of Justice Act 1696 and later the Administration of Justice Act 1705 to protect parties became increasingly applied to liquidated damages clauses, which evolved into the common law doctrine of penalties.
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The law originated in the fifteenth century in relation to "defeasible bonds" (sometimes called penal bonds) which were a contractual promise to pay money, which might be discharged if certain obligations were performed (and if the obligations were not performed, then the payment terms under the bond could be enforced).Professor A. W. B. Simpson, The penal bond with conditional defeasance (1966) 82 LQR 392, 418-419 However the courts of equity regarded these as what they really were - security for performance of the underlying obligation - and were prepared to restrain enforcement of such bonds where the defaulting party paid any damages due at common law.Sloman v Walter (1783) 1 Bro CC 418, at 419 per Lord Thurlow LC. In time the courts of common law began to mirror this approach and stay any proceedings on such bonds where the defendant gave an undertaking to pay damages together with interest and costs.
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