CLFP Collections Practice Exam

Which of the following describes a Transfer Assumption Agreement?

An agreement that gives the borrower breathing room on payments.

An agreement that reduces the loan balance.

An agreement ends the lease without transfer.

An agreement allowing a new party to assume the payments of the lessee.

A Transfer Assumption Agreement is a contract that lets a new party take over the obligation to make the remaining payments on a lease or loan. It transfers liability from the original lessee to someone else, typically with the lender’s or lessor’s consent. It’s about continuing the contract under a new payer, not about delaying, reducing, or ending the obligation. That’s why this option best describes the concept: it directly conveys the transfer of payment responsibility to another party, rather than forgiveness, modification, or termination of the agreement.