Sue is selling her home to Ben and wants to be released from her mortgage obligation to Bigger Bank. Sue, Ben, and Bigger Bank may enter a novation.

Question

Quizplus · Accepted Answer

If all three parties agree, the assignor can be released from liability at the time of the assignment, and privity of contract can exist between the assignee and the obligor. Such an arrangement is called a novation, which is a mutually-agreed to substitution of a new party for one of the original parties to a contract.

Sue Is Selling Her Home to Ben and Wants to Be