Finance
What is a 'due-on-sale clause' in a Delaware mortgage?
AA clause requiring the borrower to pay additional principal if the property appreciates
BA clause giving the lender the right to demand full loan repayment when the property is sold or transferred — preventing assumption of the mortgage without lender approval✓ Correct
CA requirement to pay property taxes when the property is sold
DA clause requiring the balance to be due within one year of the original loan date
Explanation
A due-on-sale (alienation) clause allows the lender to demand immediate repayment of the loan balance when the property is sold or transferred without the lender's consent. It prevents buyers from assuming the existing mortgage. Federal law (Garn-St. Germain Act) generally allows lenders to enforce due-on-sale clauses on conventional loans.
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