EP 005: What is a Due on Sale Clause?

Apr 8, 2019

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What Is A Due on Sale Clause? What are the most common reasons this clause gets triggered? How do you prevent it from affecting your subject to property deals?

I frequently get questioned about the due on sale clause from people who are always skeptical of the benefits of subject to property deals. Others even say that taking over mortgages is illegal! So, I decided to spend an entire episode dispelling the myths around this clause. Let me tell you, I’ve done over 400 property deals and the due on clause sale has never been an issue for me. And it's definitely not illegal. You can go out there and get yourself some Sub2deals, without any trouble from the due on sale clause, if you follow some simple rules.

This is another special episode as I interview a listener of the Sub2deals Show who was affected once by the due on sale clause. I speak to him about the circumstances surrounding the bank’s decision to call his loan due, how he handled it, and how this due on sale clause has only affected him once in his 11-year career in real estate.

In this episode, I explain what a due on sale clause is and also:

The steps you can take to ensure that the due on sale clause doesn’t affect your property deals.
Share where you can find the due on sale clause in your mortgage documents and what it says.
Outline the two most common reasons for the due on sale clause to be triggered (insurance and bankruptcy of seller) and how to handle both without losing your deal.
What bankers think about the due on sale clause and what action they usually take when titles are transferred.

If you would like to learn more about subject to deals, check us out at Sub2Deals.com.

I recommend reading through my article on Sub2 & Insurance.

For information on using a land trust, the product I recommend can be found here.

I believe getting yourself educated on Sub2deals is one of the best investments you can make for your real estate investment journey so if you’re looking to learn more about Sub2 then get my Ultimate Sub2 Guidebook.

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