Due to sale clause by a lender

[Demjan Van Der Kach]

Can a lender drop it while getting a house "subject to", for example? What would be the documentation?

Is it possible at all???

Thank you

[Brian Pleshek]

It is not illegal.  The Truth about Due on Sale.  But it will violate the due on sale clause.  The clause says that the lender has the right to call the loan if a sale happens.  This may or may not happen.  It is more likely to happen when the interest rates go up because they will be making less money on a loan that is at a lower rate than market rate.

Many who do due on sale end up flipping the property so that the issue is moot anyway.  But the bank may not do anything even if you notify them because they want a performing note and exercising the due on sale clause may put the property into their inventory which isn't something the bank really wants.

Brian