Finance
The 'due-on-sale' clause in a mortgage requires:
AThe buyer to obtain a new loan when the property is sold
BThe seller to pay off the loan at closing
CThe lender to approve any new buyer before transfer
DThe loan balance to be paid in full if ownership is transferred✓ Correct
Explanation
A due-on-sale (alienation) clause requires the entire loan balance to be paid in full when the property is sold or transferred. It prevents buyers from assuming the existing loan without lender approval.
Related California Finance Questions
- What is the primary difference between a mortgage and a deed of trust?
- What is the purpose of RESPA (Real Estate Settlement Procedures Act)?
- A VA loan guaranty means:
- The annual percentage rate (APR) on a loan differs from the interest rate because it includes:
- California's anti-deficiency statutes generally protect borrowers in which foreclosure scenario?
- What is a reverse mortgage and who typically uses it?
- Which government-sponsored enterprise (GSE) specializes in purchasing and securitizing FHA and VA loans?
- Which of the following best describes a 'purchase money mortgage'?
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →