Restrictions on Transfer by the Mortgagor
1. Due-On-Sale Clause
A mortgage provision that affords the mortgagee the right to accelerate the mortgage debt and to foreclose if the mortgaged real estate is transferred without the mortgagee’s consent.
- Important for lenders because for sellers with lower-than-market interest rate mortgages on their property, assumability of the mortgage was a key to obtaining a higher price for the property.
2. Due-On-Encumbrance Clause
Authorizes the mortgagee to accelerate the debt if the mortgagor further encumbers the mortgaged real estate.
3. Increased-Interest-On-Transfer Clause
Authorizes the mortgagee to increase or adjust the mortgage interest rate in the event of a transfer by the mmortgagor.
4. Installment Land Contract Prohibitions on Transfer
Prohibits assignment by the vendee without the vendor’s permission. Vendor can terminate the contract and purchaser loses equity.
5. Events Triggering Acceleration
Sale or any interest in the land sold or transferred.
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