What Is a Due-on-Sale Clause in Real Estate?

A due-on-sale clause—also known as an acceleration clause—is a provision in a mortgage or deed of trust that allows the lender to demand full repayment of the loan if the property is sold or transferred to another party without the lender’s consent.

💼 How a Due-on-Sale Clause Works

  • When a borrower sells or transfers ownership, the lender can require the remaining balance to be paid in full.
  • This prevents buyers from taking over the seller’s existing loan without lender approval (known as an “assumption”).
  • Most conventional and federally backed mortgages include this clause.
  • Exceptions exist for certain family transfers, inheritance, or divorce settlements under federal law.

The clause protects lenders by ensuring they can adjust loan terms or interest rates if the property changes hands.

⚖️ Purpose and Common Exceptions

  • Purpose: To prevent low-interest loans from being transferred to new buyers in higher-rate markets.
  • Exceptions: Transfers between spouses, to heirs after death, or into certain living trusts typically do not trigger the clause (per the Garn–St. Germain Act).

Buyers interested in assuming an existing mortgage must always check with the lender to confirm if a due-on-sale clause applies.

🏠 What It Means for FSBO Sellers

If you’re selling your property For Sale By Owner (FSBO), the due-on-sale clause means you can’t transfer your existing mortgage to the buyer unless the lender allows it. With Brokerless, you can still list your home on the MLS to reach more buyers and manage the sale directly without paying 6% commission.

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Explore more plain-English real estate terms in our Real Estate Glossary .