Due-on-Sale Clause (Alienation Clause)
A mortgage clause that lets the lender call the full balance due if the borrower transfers the property without paying off the loan.
Quick flashcard
What does Due-on-Sale Clause (Alienation Clause) mean on the Texas real estate exam?
Answer: A mortgage clause that lets the lender call the full balance due if the borrower transfers the property without paying off the loan.
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Due-on-Sale Clause (Alienation Clause) definition
A due-on-sale clause, also called an alienation clause, lets the lender demand full repayment when the borrower sells or transfers the property without the lender's consent. It prevents a buyer from quietly taking over the seller's existing loan.
It is a specific trigger of the lender's acceleration power, aimed at transfers rather than missed payments.
Source basis
Definition checked against the official sources below on .
On the exam
Exam trap
Tested in
Financing & Settlement (7 of 80 National)
From definition to recall
See this term inside a real exam question.
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