Mortgage Glossary
Due-on-Sale Clause
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
A due-on-sale clause lets a lender demand full repayment of a mortgage if the property is sold or transferred without the lender's consent.
What Due-on-Sale Clause means
This clause prevents buyers from informally taking over a seller's loan. It is why most conventional loans cannot be assumed. Government loans are exempt because they are formally assumable through the lender.
Florida example
A seller who tried to let a buyer simply take over a conventional loan triggered the due-on-sale clause, forcing the loan to be paid off and a new one obtained.
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