Also known as: alienation clauses · due-on-sale clause
Written by attorneys · grounded in primary & secondary sources — see below
A provision in a mortgage or deed that restricts or conditions the transfer of the mortgaged property. The clause typically permits the mortgagee to accelerate the debt upon an unauthorized conveyance without the mortgagee's consent.
Naomi mortgaged a mixed-use building to Metro Bank under a mortgage containing an alienation clause. Two years later Naomi sold the building to Leo via a wraparound installment contract without notifying the bank. When Metro discovered the transfer it invoked the clause to demand full payment and initiate foreclosure proceedings.
William and Barbara Sabo received a homestead patent that contained no express prohibition on alienation. They later conveyed the property to William Horvath. The absence of a specific alienation clause in the governing statute allowed the transfer to stand despite later challenges by the original entryman.
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No. Modern law permits the lender to accelerate according to the clause's terms upon an unauthorized transfer without any separate showing that the transfer impaired the lender's security position.
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Yes. A land contract conveys an equitable interest in the property and therefore constitutes a transfer that activates the due-on-sale provision even though legal title remains with the seller.
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No. The clause is enforceable according to its terms regardless of any family relationship between transferor and transferee or any informal agreement that the original borrower will continue making payments.
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…n.7, we cited Barnes v. Poirier , 64 F. 14, 18 (8th Cir. 1894), which points to the significance of the absence of a specific alienation clause in the Soldiers’ Additional Homestead statute. Numerous cases relating to United States land patents under other statutes hold that the silence of land patent statutes is determinative of…