Amortization profit

Amortization profit

What does Amortization profit mean in American Law?

The definition of Amortization profit in the law of the United States, as defined by the lexicographer Arthur Leff in his legal dictionary is:

An inartistic term for the extra cash a seller of real estate will have due to the repayments of mortgage principal he made during the time he owned the property. The term is misleading because the extra cash is not profit; it is just the repayment of borrowed money, i.e., a further investment of his own money in replacement for the mortgage lender’s. The terminology is, of course, not important, so long as the seller doesn’t delude himself into believing that when he bought a building for $100,000 (all

supplied by a mortgage), paid off $25,000 of the mortgage, and then sold it for $100,000, he had a “profit” of $25,000 just because he found himself, after the sale and his payment of his mortgage, with $25,000 in cash.


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