Contracts
In South Dakota, a contract that includes a 'due-on-sale' clause means:
AThe entire loan balance is due immediately upon the sale of the property✓ Correct
BThe purchaser must pay all property taxes at closing
CThe seller must pay off all liens before the sale closes
DThe earnest money is due when the sale is final
Explanation
A due-on-sale clause (acceleration clause) in a mortgage requires the full loan balance to be paid upon the transfer of the property. This prevents buyers from assuming the seller's mortgage without lender approval.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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