FOR LAWYERS

Due on Sale

A Due on Sale Clause is a common provision in mortgage contracts. In this article, we’ll define the term “Due on Sale.”

Key Takeaways

  • A Due on Sale clause is a common provision in mortgage contracts requiring the borrower to fully repay the loan if the property is sold or transferred to a new owner
  • If the borrower fails to comply with the Due on Sale clause, the lender may initiate legal action to enforce it
  • Due on Sale clauses may limit borrowers’ options and make it more difficult for them to sell the property
  • Due on Sale clauses can also benefit borrowers by protecting them from having to pay an existing mortgage on a property

What Is a Due on Sale Clause?

A Due on Sale Clause is a legal provision commonly included in mortgage contracts that enables the lender to demand full repayment of the loan if the property is sold or transferred to a new owner. This clause provides lenders with protection against the risk of a borrower transferring the property to someone else without paying off the outstanding mortgage balance. The clause is typically included in the mortgage agreement and is binding on both parties.

The Due on Sale Clause gives the lender the right to accelerate the loan and demand full repayment of the outstanding balance if the property is sold or transferred without the lender's approval. This means that the borrower cannot simply transfer the property to someone else without paying off the mortgage or obtaining the lender's consent. If the borrower fails to comply with the Due on Sale Clause, the lender may initiate legal action to enforce the clause and recover the outstanding balance of the loan.

From the borrower's perspective, a Due on Sale Clause may limit their options for transferring or selling the property. If the borrower wishes to transfer the property to a new owner, they may be required to pay off the mortgage in full or obtain the lender's consent. This can make it more difficult for the borrower to sell the property, particularly if they are in a situation where they need to sell quickly.

However, the Due on Sale Clause can also benefit the borrower by providing them with some protection against the risk of assuming an existing mortgage. If the borrower is purchasing a property subject to an existing mortgage, the Due on Sale Clause ensures that the lender cannot simply transfer the mortgage to the new owner without their consent. This can help to prevent the borrower from becoming responsible for an existing mortgage that they cannot afford to pay.

It is important for borrowers to fully understand the Due on Sale Clause and its implications before entering into a mortgage agreement. It’s always recommended to work with a real estate attorney to review mortgage agreements.

Ask a Lawyer

Ask your own question and get advice from expert attorneys
Ask Question

Featured Real Estate Law Lawyers

Hyde Law PLLC

13 years in practice
Bankruptcy, Real Estate Law, Trust & Estate
View Profile

The Derbes Law Firm, LLC

33 years in practice
Bankruptcy, Business Law, Real Estate Law, Tax Law, Trust & Estate
View Profile

Pohl Bankruptcy

22 years in practice
Bankruptcy, Real Estate Law, Tax Law, Trust & Estate
View Profile

Richardson Law Firm P.C.

12 years in practice
Hair Relaxers Lawsuit, Mass Tort, Personal Injury, Rideshare Lawsuits, Tepezza Lawsuit
View Profile

Adam Rieth - Injury Attorney

10 years in practice
Auto Accidents, Brain Injury, Motorcycle Accidents, Personal Injury, Truck Accidents
View Profile

Vanguard Attorneys

12 years in practice
Auto Accidents, Motorcycle Accidents, Personal Injury, Truck Accidents, Wrongful Death
View Profile

Contact AttorneyAtLaw.com

Are you looking for an attorney? Do you have questions about a legal case you are facing? Contact us now and we will put you in touch with a lawyer for free.
Attorney At Law is changing how clients connect with lawyers. By providing an innovative platform to lawyers who want to expand their practice’s reach, AAL is bringing law practices into the future.
6142 Innovation Way
Carlsbad, California 92009
Some of the content of this website may be considered attorney advertising under the rules of certain jurisdictions. The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute an attorney-client relationship.
crossmenuchevron-upchevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram