Forfeiture

A forfeiture is the loss of one's ownership interest in an asset without compensation. This situation arises when the owner does not comply with the terms of a legal agreement. For example, a tenant forfeits the right to continue using property in the absence of periodic rental payments.

An asset forfeiture can also be triggered by a court that finds in favor of a plaintiff and orders the transfer of property to the plaintiff to settle damages. Alternatively, property can be forfeited to the government on the suspicion of illegal activity. For example, the government may seize a vehicle that was owned by someone dealing in drugs.