Preventing due on sale clause

[Jacob Michal]

So as I get into the journey of learning more about rentals and trying to hold properties instead of only wholesale them. One thing me and a good friend of mine were talking about is how there is a possible downturn (Not saying it’s going to happen I have no clue if it will or not) but we were talking about banks calling loans due so I’m just trying to brainstorm on how to counteract that and make sure your rentals are recession proof and able to have a exit strategy if banks do start calling notes due on what your plan would be.? Any insight would help .

[Joe Splitrock]

Originally posted by @Jacob Michal:

@Joe Splitrock yeah I’ve done subject to’s before but I’m wondering if they can call a loan due you get In you’re name because of a economy crash

 "Due on sale" and "calling loans" are two different things. If you took out the loan and your name is on the title, there has been no sale and therefore no due on sale clause can be triggered. A loan can only be called if the terms allow it. Most loans are fixed term, so this really wouldn't happen. It could be an issue with commercial loans that have 20 years amortization with 5 year term. At the end of 5 years the bank may just want their money and not want to refinance with you. If you stop making payments, any loan can go through foreclosure.