Logo

What is a due on sales clause?

Bar Exam Prep Real Property Security Interests in Real Estate What is a due on sales clause?
😀 Real Property • Security Interests in Real Estate PROP#214

Legal Definition

A due on sales clause allows the lender to demand full payment of the loan if the mortgagor transfers any interest in the property without the lender's consent.

Plain English Explanation

A "due on sales" clause is a super common clause from lenders. It basically says, "Hey, we agreed that you can pay me back in small amounts over time while you own this property, but if you ever transfer ownership to someone else, then you have to pay the rest of your loan now."

Related Concepts

How do states treat a mortgage without a note? How do states treat a note without a mortgage? How is a mortgage's priority determined? How may a party be a holder in due course of a note? In lieu of foreclosure, what do many installment contracts prefer and how do courts address this alternative? Under which theories may a mortgagee take possession of a property and begin receiving rents before foreclosure? What are the 5 types of security interests in real estate? What are the benefits of the holder in due course status? What are the limitations of a junior interest? What are the methods of transferring a note? What interests does a foreclosure destroy? What is a deficiency judgment? What is a foreclosure? What is an installment land contracts? What is a receivership? What is a redemption in equity? What is a statutory redemption? What is the distribution order of proceeds from a foreclosure? What is the result of a grantee assuming the mortgage? What liabilities are associated with a mortgaged property that is transferred to another party? What occurs in intermediate theory states? What occurs in lien theory states? What occurs in title theory states? What results from a party purchasing a foreclosed property subject to a senior interest? What security interests exist under a absolute deed? What security interests exist under a deed of trust? What security interests exist under a installment land contract? What security interests exist under a mortgage? What security interests exist under a sale-leaseback? Who may transfer their interest in a mortgage?
Law School Boost Robot

Get Law School Boost for Free!

Law School Boost makes studying for law school and the Bar easier using our science-backed, A.I.-driven, adaptive flashcards with integrated hypos, plain English legal translations, and memorable illustrations. Start now for FREE!