Indenture is a legal and binding contract entered into between two or more parties. It is usually associated with bond agreements, real estate, or bankruptcy filings. It is a contractual document that sets out the terms, clauses, and covenants of the agreement between the parties to the contract. An indenture outlines the conditions and responsibilities of each party, so it should be thoroughly understood and read before signing.

Indentures can involve a variety of agreements and legal documents. The most common type of indenture is a bond indenture. In this type of agreement, a bond issuer agrees to make payments to bond buyers (investors) on certain predetermined dates. Bond indentures also state what interest rate the investor can receive and when they must be paid out. These indentures also cover commonly associated topics such as bondholder rights, and what type of collateral can be used in the agreement.

Property indentures are also commonly used in residential and commercial real estate transactions. A real estate seller and buyer enter into a contract in which they agree on the terms and conditions surrounding the sale of the property. An indenture will stipulate the responsibilities of each party, including any legal restrictions added to the sale. For example, the indenture would specify if one or both of the parties will incur a mortgage on the property or if the sale will involve a lease agreement.

In business bankruptcy proceedings, a company and its creditors may enter into an indenture agreement to outline any debt restructuring. Creditors will agree to accept a certain amount of money or agreed upon terms in exchange for releasing the debtor from the original agreement. The terms and conditions will be specified in the indenture.

In all cases, the purpose of an indenture is to provide binding protection to both parties and to set out the rights and duties of each party in the contract. Indentures are often considered very detailed and complicated legal documents, so it is important that both parties carefully read and understand the agreement. By doing so, all parties can ensure they are entering into a legally binding agreement that meets their needs and interests.