There are aspects of elder law that are at the intersection with other areas of practice. As an example, seniors commonly transfer their property to a trust as a part of an estate plan. The change in title may be considered to avoid probate, to assist in the management of the property or to qualify for government benefits. If the property has a loan secured by a lien, however, great care must be exercised to avoid the unintended consequence of triggering the acceleration of the loan.
What Is a Due-on-Sale Clause?
Most mortgage agreements contain a provision allowing the entire amount of the remaining debt to become due and payable upon the transfer of the property. It is commonly called a “due-on-sale” clause. Such a provision could contain the following, “Lender may require immediate payment in full of all sums secured by this security instrument if all or any part of the property, or if any right in the property, is sold or transferred without lender’s prior written permission. However, this option shall not be exercised by lender if such exercise is prohibited by applicable law.”
