What is a deed of trust with a due-on-sale clause?

A deed of trust with a due-on-sale clause is a legal contract between a borrower and a lender that is used in residential real estate transactions in North Carolina. The borrower conveys legal title to a lender, usually a bank or other financial institution, and retains use of the property until the loan is repaid. The due-on-sale clause requires that the loan must be repaid in full if the property is sold or otherwise transferred before the loan has been repaid in full. This clause provides the lender with an assurance that they will receive full repayment of the loan during the term of the loan. The deed of trust is recorded with the Register of Deeds in the county in which the property is located. This creates a lien against the property, which is enforceable by the lender in the event that the borrower defaults on the loan. The lender can foreclose on the property to recover any amounts that the borrower has failed to pay, including any arrearages or late fees. The due-on-sale clause is an important tool for lenders because it ensures that their loan is repaid in full in the event of a sale or transfer of the property before the loan is fully paid off. This allows lenders to make investments in residential real estate with the assurance that they will receive full repayment of the loan.

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What is a deed of trust with a due-on-sale clause?

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