Real Estate Glossary

What is Due-On-Sale Clause?

A due-on-sale clause is a provision in a mortgage or deed of trust that allows the lender to demand payment of the outstanding balance of the loan in full if the property is sold to a new owner. Due-on-sale clauses are designed to protect the lender's interest in the property and to ensure that the borrower does not transfer the property to someone who is unable or unwilling to make the required payments. Due-on-sale clauses may be triggered by a variety of events, such as the sale of the property, the transfer of ownership to a trust or other entity, or the death of the borrower.