Definition - What does Due-on-Sale Clause mean?
Due-on-Sale clause is a type of a provision in deed of trust or mortgage which allows the request of immediate payment by the lender of the remaining mortgage amount. This is usually practiced after the sale of the property which was used in securing the mortgage.
Justipedia explains Due-on-Sale Clause
In current time, all mortgage loans in US have a due-on-sale clause. The logic behind this clause is that a lender can only call a loan due if the asset securing it is being sold. Due-on-Sale clause basically aims to protect the loan going into default.
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