Understanding Real Estate: What is a Due on Sale Clause?

After being asked many times about land contracts, The Selling Team has an answer that will provide you with what you need to know. A “due on sale” clause is a provision in your mortgage that gives the lender (your bank) the right to demand payment of the remaining balance of your loan when the property is sold.  This means that when the title to the property is transferred, the bank has a contractual right to collect what is owed on the mortgage.  Sometimes a bank is willing to drop the due on sale clause.  If you are thinking about doing a land contract on your home, this is an important question to ask your lender who originated the loan.  With a land contract, you are transferring ownership, but the mortgage is not paid in full until the end of the term.   So a “due on sale” clause is a typically hurtle to overcome.