Enforceability (or lack thereof) of Due-on-Sale and Due-on-Encumbrance Clauses

Enforceability (or lack thereof) of Due-on-Sale and Due-on-Encumbrance Clauses | Peter Roach

Due-on-Sale Clause The Due-on-Sale clause contained in most mortgages provides that if the property secured by the mortgage is sold to a third party without the lender's consent, the lender has the right to demand full payment of the loan. Lenders require this so that any prospective purchaser will feel compelled to submit a complete application to them, in order to avoid the risk of a foreclosure based upon the default of failing to obtain the lender’s consent.

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