Due on Sale Clause Law and Legal Definition

A due-on-sale clause is a clause in a loan or promissory note that stipulates that the full balance may be called due upon sale or transfer of ownership of the property used to secure the promissory note. The lender has the right, but not an obligation to call the note due in such a circumstance. In other words, it is a provision in a mortgage that enables a lender to demand full repayment if the borrower sells the mortgaged property.