What is a due on sale clause?

A due on sale clause is a legal clause included in mortgage contracts in Washington state that allows the lender to call the loan due if the property changes owners. This means that if a homeowner sells their house, the lender can require full payment of the loan balance within a certain timeframe. In most cases, lenders may also require the buyer to assume the existing loan, thus allowing them to avoid foreclosure. Due on sale clauses are important for lenders because they provide security that the loan will not be transferred to another borrower. A due on sale clause can be triggered by other events as well, such as if a homeowner divorces and transfers ownership of the property to another party. If a homeowner wants to rent out their house, they must also receive lender approval in order to avoid triggering the due on sale clause. Lenders must comply with state laws when enforcing the due on sale clause. In Washington, the lender must give the borrower at least 30 days notice before the loan is called due. However, if a borrower fails to make payments, the due on sale clause can be enforced immediately. In conclusion, a due on sale clause is a legal clause included in mortgage contracts in Washington state that allows the lender to call the loan due if the property changes hands. It provides lenders with greater security and helps them avoid foreclosures. To avoid triggering the due on sale clause, borrowers must receive lender approval for certain activities such as renting out their house and transferring ownership. Washington state laws also require lenders to give the borrower a certain amount of notice before the loan is called due.

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What is a due on sale clause?

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