Due on Sale Law and Legal Definition

Due on sale clauses are provisions in a contract, typically a loan against property, which is an acceleration clause in a loan, calling for payment of the entire principal balance in full, triggered by the transfer or sale of a property. Such a clause permits a secured mortgage lender (federal, state or private) to call the entire unpaid loan balance due and payable immediately if the property securing the loan is sold, transferred, traded, gifted or otherwise disposed of without the lender’s prior written consent. It is also referred to as an alienation clause.