How to Avoid the Due On Sale Clause with Subject To Deals
<p>A due-on-sale clause is a mortgage contract provision enabling a lender to demand the borrower repay the remaining mortgage balance in full if the property is sold or transferred.<br />
In most real estate transactions, a buyer obtains a new mortgage to pay the seller for the house, and the seller uses these proceeds to pay off the remaining balance of their mortgage, taking any excess amount as profit. This essentially forces the seller to pay off their debt before formally transferring the title of the home.</p>
<p>When the loan terms include a due-on-sale clause, the mortgage is not assumable by the home’s buyer. The transaction plays out this way to ensure that a buyer gets a new mortgage at a more current interest rate, with current terms, and a seller can’t sell a home without the bank’s consent.</p>
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