What is an indenture agreement?
Asked by: Miss Verona Keeling | Last update: February 3, 2026Score: 4.4/5 (25 votes)
An indenture agreement is a formal, legal contract between two or more parties, most commonly in finance for bond issuance or in real estate, that outlines specific terms, obligations, and rights, ensuring clear responsibilities for debt, property, or service, with a trustee often overseeing it for bondholders. While historically used for apprenticeship/labor, today it's crucial for defining bond details like interest, maturity, and repayment, protecting investors by pledging assets as security.
What is the purpose of an indenture?
An indenture is a legal agreement that sets the terms of a financial or real estate deal, such as a bond or property contract. In finance, indentures define bond details like maturity dates, interest, and covenants, while in real estate, they outline obligations between parties.
What is an example of an indenture?
Example 1: A homeowner enters into an indenture with a contractor to maintain their property. The contractor agrees to perform regular maintenance in exchange for monthly payments.
What is the difference between an indenture and a purchase agreement?
While a BPA is an agreement between the issuer and the underwriter of the new issue, the indenture is a contract between the issuer and the trustee who represents the interests of bond investors.
What is an indenture in the UK?
An indenture is a legal contract between two parties, whether for indentured labour or a term of apprenticeship or for certain land transactions.
What Is an Indenture?
Is an indenture legally binding?
Yes, an indenture is a form of contract. It's a legally binding agreement between two or more parties that is formalised in a legal document. An indenture contract is typically more detailed than a standard one, outlining specific terms, conditions, and covenants to which the parties must adhere.
What are the disadvantages of using an indenture?
The largest disadvantage of indentures, however, is that they are non-transferable and cannot be renegotiated once they are signed. It is important that all involved parties recognize the purpose, benefits, and disadvantages of indentures before entering into a contract with other individuals.
What is an indenture agreement in real estate?
An indenture agreement is a legally binding document or contract that establishes terms and conditions between two or more parties. Indenture agreements can govern a real estate transaction, a bankruptcy proceeding, or debt agreements.
What are the three types of credit agreements?
These include credit sale agreements, hire purchase agreements and conditional sale agreements.
What are the 4 types of debentures?
Various types: A debenture can be structured in several ways, each offering distinct features. Common varieties include convertible, non-convertible, redeemable, and irredeemable forms.
What is the legal meaning of indenture?
An indenture is a particular formal contract or deed made between two or more parties. Beginning in medieval England, an indenture can be defined as a specific agreement within a contract noted with a specific duration or significance.
What is the rule of indenture?
In finance, an indenture is a legal contract between a bond issuer and bondholders that outlines the terms and conditions of a bond issue. It is also known as a trust indenture or deed of trust. Think of it as the official rulebook that governs the bond—covering everything from payment terms to investor protections.
Is an indenture a loan agreement?
Like credit agreements,1 an Indenture contains lending and repayment terms. In contrast to credit agreements, however, the lender is not a party to an Indenture.
What is the strongest form of deed?
The strongest form of deed is the general warranty deed, also known as a full covenant and warranty deed, because it offers the buyer (grantee) the highest level of protection, guaranteeing clear title and defending against any claims from the entire history of the property, not just the seller's ownership period.
Is an indenture a trust?
An indenture of trust, also known as a trust indenture, is a legal document that outlines the terms and conditions governing the relationship between a trustee and the beneficiaries of a trust.
Who are the parties in an indenture?
A contract between an Issuer and a Trustee (normally a commercial bank with trust powers) under which the Issuer issues Bonds and specifies their Maturities, Interest Rates, Redemption provisions, form, exchange provisions, security and other terms.
What is the 2 2 2 credit rule?
The 2-2-2 credit rule is a guideline for building a strong credit profile, suggesting you have two active revolving accounts (like credit cards) open for at least two years, with on-time payments for those two consecutive years, often with a minimum $2,000 limit per account, demonstrating reliable credit management to lenders. It shows you can handle multiple credit lines consistently, reducing lender risk and improving your chances for approval on larger loans, like mortgages.
What are the four types of contracts?
While many types exist, four common contract classifications include Bilateral (mutual promises), Unilateral (promise for an act), Express (explicit terms), and Implied (inferred from actions), often categorized by the exchange, formation, or performance status of the agreement, with others focusing on payment (Fixed-Price) or enforceability (Voidable).
What are 7 types of loans?
Seven common types of loans include mortgages, auto loans, student loans, personal loans, home equity loans/HELOCs, small business loans, and payday loans, each serving different purposes like buying a home, vehicle, or funding education, with varying terms, collateral, and risk. Mortgages finance real estate, auto loans purchase vehicles (often using the car as collateral), student loans cover education, personal loans are versatile, home equity loans use home equity, business loans support companies, and payday loans offer quick, short-term cash.
Who keeps the original title deeds?
The original title deed is officially recorded and kept by your local government's County Recorder, Register of Deeds, or County Clerk office, serving as the public record, while you usually receive a copy after closing; if you have a mortgage, the lender often holds the physical deed until the loan is paid off, but the official record is always public.
Are indentures used for mortgages?
(7) The term “indenture” means any mortgage, deed of trust, trust or other indenture, or similar instrument or agreement (including any supplement or amendment to any of the foregoing), under which securities are outstanding or are to be issued, whether or not any property, real or personal, is, or is to be, pledged, ...
What is an indenture guarantee?
Indenture Guarantee means a guarantee, substantially in the form of Exhibit B hereto, fully and unconditionally guaranteeing the due and punctual payment of all amounts due under this Indenture, when and if they become due, which guarantee is subordinated to the claims against the issuer thereof in respect of ...
What does indenture mean in real estate?
1) Generally, any written agreement between two parties. 2) A real estate deed in which two parties agree to continuing obligations; for example, one party may agree to maintain the property and the other to make periodic payments.
Are contracts for deeds risky?
Some contracts for deed can provide a path to homeownership, but most carry risks. Sellers under a contract for deed might fail to provide the required consumer protections and expose you to expensive problems.
How long was a typical indenture contract?
Most labor contracts made were in increments of five years, with the opportunity to extend another five years. Many contracts also provided free passage home after the dictated labor was completed.