Posted in Finance, Accounting and Economics Terms, Total Reads: 564
It refers to a document that shows that a borrower or debtor has paid the amount with interest. It signifies that the owed amount has been repaid by the borrower to the lender in full and hence the lender cannot demand any further repayment from the debtor on that specific debt.
Simply speaking, it is a proof for the borrower that nothing as a part of repayments (principal or interest) can be demanded from the lender and hence the asset in consideration is under the name of the borrower. This term is mostly used in the laws pertaining to the real estate and property. Any property which is available for sale, should have an acquittance document. Both the lenders as well as borrowers should look out for this document before buying or selling any asset pertaining to the real estate industry. If a seller does not have any proof related to acquittance, then it is wrong or illegal to sell the asset under consideration and if bought it will be a problem for buyer as the remaining liabilities (principal or interest) will have to be paid off by the buyer. Hence, sufficient care must be taken before buying or selling an asset.
Example: A Bank can issue an acquittance to a home loan customer after he has paid all the relevant dues to the bank. This can be kept by the customer (borrower) as a proof that he has paid the debt in full to the Bank (lender).