Exoneration – Definition

Cite this article as:"Exoneration – Definition," in The Business Professor, updated September 24, 2019, last accessed October 20, 2020, https://thebusinessprofessor.com/lesson/exoneration-definition/.

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Exoneration Definition

Exoneration can also be called vindication. It is the act of absolving someone from blame or guilt. In the legal sense, exoneration is acquiting someone of a crime or a court declaring a suspect not guilty of crimes. In law, exoneration can occur when an accused demonstrates innocence or no evidence to declare the person guilty.

Exoneration is also used in financial context, it refers to the act of relieving or absolving someone of a financial duty. When you free someone from a financial obligation, you have exonerated the person. It is also used in taxation and mortgages.

A Little More on What is Exoneration

In debt or financial contracts, a lender can exonerate a borrower from all debts, this means the borrower is relieved from debt payment. It can also be regarded as an act of forgiving someone’s debt. In mortgage however, a new property owner is often exonerated from encumbrances, debts on  a property, this is because such encumbrances, defects or debts must be settled from the estate and not be the new owner of the property. This is often used in the context of settling wills and estates.

Why Exoneration Matters

In real estate, exoneration is really important. For instance, in a case where an individual inherits a property, any debt, defects or encumbrances on the property must be cleared from the estate and not by the inheritor of the property. Hence, the beneficiary is exonerated from paying or clearing the encumbrance.

In the United States, about nineteen states did not adopt the exoneration principle, they insist that the inheritor of a property is obligated to clear the encumbrances owed on the property. The only exception is when it is clearly stated in the will that the inheritor should be exonerated from the encumbrance. These states favor the Uniform Probate Code (UPC) instead of embracing the exoneration principle.

Reference for “Exoneration”

https://www.investopedia.com › Personal Finance › Mortgages



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