Land Contracts – Part IV – The Due on Sale Clause – a Black Swan?
Author: Evan Vanderwey
Website: http://www.lansingmimortgage.com/land-contracts-part-iv-the-…
Black Swans are a fictional bird that everyone talks about but no one ever sees. Unlike Black Swans, Due-on-Sale Clauses exist and have been exercised by banks in the past. It is, however, extremely rare – thus I write this post.
A due-on-sale clause is a paragraph written into a mortgage giving the lending bank the right to accelerate the payoff (foreclose) on a home if the mortgage holder (homeowner) sells the home. Since a land contract is a sale – a transfer of ownership that will hold up in court – the bank would have the right to “call” the loan if the mortgage holder sold in this way. If you have a mortgage, this paragraph is likely in it. This is the plain truth.
First, that is not the same as saying it’s illegal for you to sell your home using a land contract. You are allowed to do it under the law. But it’s wise to gain the permission of your current mortgage lender if you have one before selling your home on a land contract. You can ask for…
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