Loan mechanics
Alienation clause
A due-on-sale clause: the balance falls due if the property is transferred
It is what makes most modern loans non-assumable. Sell the property and the loan must be paid off rather than passed to the buyer. Its absence is what allows assumption, and an assumable loan becomes a genuine selling point once rates have risen.
How the exam asks about it
Also called a due-on-sale clause, and both names appear in items. Assumption questions turn on whether it is present.
Related terms
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