What clause permits the borrower to release individual lots from the lien by repaying part of the loan?

The release clause is designed specifically to allow a borrower to release individual lots from a mortgage lien in exchange for payments that reduce the outstanding loan balance. This is particularly relevant in scenarios involving subdivisions or multiple lots under a single mortgage. By including a release clause in the mortgage agreement, the borrower can pay a specified amount to have a particular lot released from the lien, thereby enabling them to sell or develop that lot without burdening the new owner with the lien obligations. This flexibility is beneficial for borrowers, as it provides them the opportunity to manage their assets more effectively while gradually paying down their debt.

In contrast, other clauses like the exemption clause typically relate to protecting certain properties or income from creditors, the default clause pertains to the lender's rights if the borrower breaches the loan agreement, and the separation clause does not have a defined role in standard lending practices regarding real estate loans. These clauses address different aspects of financing and property rights, making the release clause the correct choice for this specific function.