Novation
Replacing an original party or contract with a new one, which releases the original party from liability.
Novation substitutes a new contract or a new party for an existing one, with the agreement of all parties. When a party is replaced through novation, the original party is released from further liability under the contract.
This is the key difference from assignment. In an assignment, the original party usually remains secondarily liable. In a novation, the original party is fully released.
On the exam
Exam trap
Tested in
Contracts (12% of the exam)
From definition to recall
See this term inside a real exam question.
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This definition is Florida real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.