What is a Due on Sale Clause | What you Need to Know

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Every once in a while we’ll run into a bank that goes, Hey, you sold the property, but you didn’t pay us off. And we’re going to now foreclose on you, and demand. Do we need to get approval from the bank? Should I call the bank? You know, something along those lines? And I say, Well, let me ask you a question. I go, if I took over your groceries, do we need to call Chase and let them know you’re gonna let me take over the groceries and make the payment for you know, my doing something illegal? Am I doing something wrong? The answer’s no, I’m not. However, that does bring me to a third question that you probably won’t even ask.

And by the way, this is exactly what I say to seller, I bring up something called the due on sale, if a bank found out that you transfer the ownership to me, but the debt is still in your name. Every once in a while we’ll run into a bank that goes Hey, hi, you sold the property. But you didn’t pay us off. When you did that. That’s a problem. And we’re going to now foreclose on you and demand full payment, everybody because the robbery and that process is called due on sale. Now, it’s very rare for a seller to even care about the due on sale clause, especially in a in a subject to transaction but it’s something you should bring up.

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I have had the due on sale clause call me guys four times out of probably 700 subject to transactions. It does happen. Have I ever lost a house or have I actually had a bank ever finalized the due on sale clause? That’s the question you we win when you got the due on sale clause called on you. You called me when I was on the golf course. This was like almost two years ago. And usually when goes paste I just got the due on sale clause call me ago. Great. I’ll call you after my round of golf. He’s like, I can’t wait. I go. Yeah, you can. It’s not that big of a deal. No big whoop. And up when looking back on the due on sale clause.

How worried were you out of a 10? And How worried should you have been out of a 10 that he was a 10. And he then went to a zero out of 10. It’s very, very simple. So I call them I put them in touch with the right person. They walked in through and he’s like, Oh my gosh, that was it. And guess what? You we do still own that property. He still owns it. So guys, do we need to really worry about the due on sale clause and maybe we should just go watch my zooms dedicated to the due on sale clause.