Property Ownership
In New York, a property held in a 'revocable living trust' may be transferred to the trust without triggering the mortgage's due-on-sale clause because:
ADue-on-sale clauses do not apply to any trust transfers
BFederal law (Garn-St. Germain Act) prohibits lenders from enforcing due-on-sale clauses when the transfer is to a revocable living trust in which the borrower remains a beneficiary and continues to occupy the property✓ Correct
CNew York State law exempts all trust transfers from due-on-sale provisions
DDue-on-sale clauses only apply to sales, not trust transfers
Explanation
The federal Garn-St. Germain Depository Institutions Act (1982) specifically prohibits lenders from enforcing due-on-sale clauses when a residential property is transferred to a revocable inter vivos (living) trust where the borrower remains a beneficiary and continues to occupy the property as a principal residence. This is a key estate planning consideration for New York homeowners.
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