1. Definition of Forfeiture
2. Court Involvement
3. Federal Forfeiture
4. Forfeiture Origins

Definition of Forfeiture

The definition of forfeiture is a term that describes any property loss without just compensation. Forfeiture happens when someone gives up privileges, property, or money to compensate for losses stemming from a violation of a legal obligation in some form. The automatic ownership loss to that property for not complying with an agreement is a common occurrence in court judgements, and the defendant is the one who forfeits the property or money to the plaintiff.

For instance, a forfeiture clause in contracts allows a landlord the right to cancel a lease, and the tenant cannot enter a property due to non-payment of rent. Forfeiture can come in a variety of forms, such as:

  • A corporate charter loss or franchise from an illegality
  • Nonfeasance or malfeasance

Forfeiture, under an agreement, highlights a mandate by a defaulting party to relinquish an asset or monetary sum as compensation if that party breaches the contract. Forfeitures can be arranged privately.

  • Example: In a contractual relationship, a party may have to relinquish a specified property if that party fails to fulfill an obligation.

Court Involvement

The courts are usually used to resolve contract disputes surrounding property forfeiture. A judge may examine such cases to assess if the terms are fair and were not agreed upon during duress or deception. In criminal courts, this also refers to government property seizure stemming from illegal activities, a method that has been used by the government in the so-called "War on Drugs."

When required by law, as punishment for illegalities, forfeiture can be invoked in civil or criminal form. The forfeiture process usually involves a court proceeding before it can take place.

A forfeiture that inspires the most discussion within the United States are those issued by federal or state governments. Congress and other state bodies issue statutes allowing law enforcement to claim property on the suspicion of illegal activity. The property can be forfeited to a government body when conviction takes place, and it could happen without a criminal proceeding.

Many states have also passed laws allowing forfeiture, and municipal governments and cities have cooperated with forfeiture measures by state and federal laws to deal with the following:

  • Drunk driving
  • Prostitution
  • Unsafe housing

When a nonperformance or contract breach occurs, an order to compensate the aggrieved party will be issued.

  • Example: Forfeiture of a deposit for failing to close a purchase transaction is a usual stipulation in a real estate agreement.

Federal Forfeiture

The Securities and Exchange Commission (SEC) will go after insider traders who make profits from non-public information. With that, the SEC’s limited resources cannot catch all insider traders, but it will invoke forfeiture, including civil and criminal penalties that could result in jail time.

The Justice Department has comprehensive asset forfeiture programs with the support of the following agencies:

  • Drug Enforcement Administration
  • Bureau of Alcohol, Tobacco, Firearms and Explosives
  • Federal Bureau of Investigations
  • U.S. Attorney Offices

The Justice Department created the National Assets Seizure and Forfeiture and seized $27 million from drug-based cases in 1985, the year it was created. That amount grew to $875 million by 1992. Agencies aside from the DOJ have been empowered to levy forfeiture penalties too. Moreover, the U.S. Postal Inspection Service also delves into mail fraud, drug trafficking, and money laundering via the mail system. The Food and Drug Administration has a criminal investigations division to grab money from cases involving health care fraud and the sale and production of counterfeit drugs.

Forfeiture Origins

Old English Law states that a release of land by tenants to the tenant’s lord because of a breach in conduct or the loss of goods can invoke forfeiture. Further, the idea of forfeiture within the United States stems from English Common Law. English courts issued three types of forfeiture:

  • Escheat upon Attainder: An individual’s property that reverts to the government when a person gets convicted of a felony or treason. This stems from the idea that the government retained superiority over property
  • Doctrine of Deodand: This allowed English courts to remove a person of his property if that property was involved in an offense. For instance, an owner could lose a horse if that horse caused the death of an individual.
  • Statutory Forfeiture: This was the only type of forfeiture permitted in the American colonies. This means that the colonies did not order forfeiture unless it was passed by under the legislature.

To learn more about a definition of forfeiture, you can post your job on UpCounsel’s website. UpCounsel’s lawyers will provide more information on forfeiture and how you can protect your assets and money in an agreement. Also, they will defend your rights in court if another party or government agency is trying to seize your assets.