DEFINITION of Reclamation
Reclamation is the right to reclaim property in the event of non-payment, fraud or other irregularities. Reclamation in the financial context generally refers to the right to demand a repayment of monies paid if there has been a bad delivery of a stock or security. It may also refer to the right of the seller to reclaim the property and assume ownership if the buyer does not pay or fails to meet the terms of the purchase agreement. Reclamation also refers to the process of reconverting previously unusable lands such as closed mine sites or defunct industrial areas to productive uses.
BREAKING DOWN Reclamation
Reclamation is the process whereby somebody can reclaim their property or money if the counter party to a deal doesn't deliver on their part of the agreement. In the securities industry, reclamation can be minimized by cutting down the chances of bad delivery, which can be achieved by registering and transferring securities in book or electronic form rather than using physical certificates.
An example of reclamation is the foreclosure process, whereby the lending institution regains ownership of a real estate property if the buyer defaults on the mortgage obligations. Property repossession is also an example of reclamation. A car is collateral that secures a car loan. If you do not pay the loan, the lender can reclaim the car. An investor can reclaim their invested capital if delivery of the underlying security is not legitimate.