Alienation Clause Real Estate

Alienation Clause Real Estate

An Alienation Clause, also known as a Due-on-Sale Clause, is a provision in a mortgage or deed of trust that gives the lender the right to demand full repayment of the loan if the property is sold or otherwise transferred. In other words, it prevents the borrower from transferring ownership of the property without paying off the mortgage in full.

This clause is included to protect the lender from a borrower selling or transferring the property to someone else, particularly if the new owner may not meet the lender’s creditworthiness or other standards. Essentially, if a borrower tries to sell their home, the lender can "call" the loan, requiring the entire balance to be paid at the time of the sale.

It's an important concept in real estate because it can impact a seller's ability to transfer property, particularly in cases where they wish to let a buyer "assume" their mortgage at its original interest rate.