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What is a due on sale clause

What is a due on sale clause
  • December 12 2012 - US
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Answers (2)

Go Huskers said it all. And lenders do notice.
  • December 13 2012
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"It means that when you sell the house you have to pay the loan back immediately.   
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It actually is due on sale or transfer and can be triggered by more than a sale. An example is as follows:

"The Borrower agrees that if all or any part of its interest in the Property is sold, transferred, mortgaged or otherwise conveyed, voluntarily or involuntarily, either while the Borrower is living or upon the death of the Borrower, or the Property ceases for any other reason to be the Borrower's principal place of residence this act shall be a default and Borrower shall repay the Lender the full amount of the outstanding indebtedness. Any required repayment shall be made to Lender not later than the 30th day following the sale, transfer or other conveyance, or following the date upon which the Property ceases to be the Borrower's principal place of residence."
  • December 12 2012
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