Forfeiture is the loss of property or assets due to failure to meet contractual obligations. Examples include mortgage defaults and stock purchase breaches. Legal action is necessary for recognition and transfer of assets involved in forfeiture.
A forfeiture is loss or property or assets due to some kind of failure to meet contractual obligations. The situation may involve a decision to stop making payments under the terms and provisions of a purchase agreement, or be the result of an inability to service an obligation due to some sort of finance reversal. When this happens, the borrower defaults and therefore loses or loses control of the contract assets and must surrender them to the lender.
One of the most common examples of forfeiture is found with a mortgage default. In the event that the borrower is unable or unwilling to continue paying the outstanding balance of the loan, the lender has the right to default on the loan agreement and seek legal means to secure the property used as collateral for the loan. This means that by ceasing to make payments under the terms outlined in the loan agreement, the homeowner loses the right to retain control of the property and title will transfer to the lender. At that point, the lender may sell the property as a means of settling the outstanding debt or choose to hold the property for other purposes.
It is also possible to have other assets confiscated. For example, an investor may lose his or her interest in stocks. This usually occurs due to a breach of contract involving the purchase of the shares. When this happens, the previous owner has the right to declare forfeiture and regain control of the shares. For example, if the shares were purchased by the investor as part of an initial public offering and payment terms are not met, the investor loses the shares and reverts to full ownership by the company that issued the IPO.
The effective incidence of forfeiture must normally be ascertained in court, according to the laws in force in the territory where the activity was carried out. Laws related to the forfeiture declaration process and rules on how to handle the transfer of property involved in forfeiture will vary from one country to another. For this reason, it is important to engage the services of a legal professional when there is any type of breach of a contractual agreement, so that the forfeiture can be legally recognized and the appropriate legal action can be taken.
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