Reviewed by Casa Academy and updated July 29, 2026 using the current DBPR checklist and Pearson VUE scheduling guidance.
Real Estate Novation
Novation in real estate is the substitution of a new party or contract for an existing obligation with consent of all affected parties, releasing the original obligor and creating a fresh contractual relationship rather than a mere assignment of rights.
Exam context
Novation substitutes new party with all-party consent and releases original obligor. Assignment transfers rights but may leave original liable. Assumption may require lender novation.
Elements and consent
All parties to the original agreement and the incoming party must agree to replace the old duty with a new one. A lease novation substitutes a new tenant for the original tenant and releases the prior tenant if the landlord accepts. Without novation, an assignment may transfer possession but leave the original tenant liable.
Loan and lease contexts
Mortgage assumption sometimes requires lender novation of the note obligor. Commercial leases may novation when a corporate parent guarantees a subsidiary tenant. Agents should not promise release from liability without written confirmation that a true novation occurred, not just an assignment.
Examples
Lease substitution
A landlord, outgoing tenant, and incoming tenant sign a novation agreement replacing the lease obligor and releasing the outgoing tenant from future rent liability.
Failed assignment
A tenant assigns a storefront without landlord consent. The original tenant remains liable because no novation occurred, illustrating assignment without release.
Keep studying
Related terms
- Executed contractsBinding agreements subject to novation or assignment.
- Alienation clauseDue-on-sale clause limiting assumption without lender consent.
Related resources
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- Real estate glossary hub
Browse all published national glossary entries.
- Florida exam topic hub
Florida-specific explainers and question sets for this topic area.
Sources
- Cornell LII: novation(Cornell Legal Information Institute)