Financing, 9% of the examination
Due-on-sale clause
A loan provision letting the lender call the entire balance due on sale or transfer of the property.
Also called an alienation clause. It is the reason loan assumption is uncommon on conventional loans, and it is what makes an assumable FHA or VA loan valuable when rates have risen. It is not the same as a prepayment penalty, which charges a borrower for paying early rather than for selling.
See it in a question
One question from Financing, so the term lands in the context the exam uses it in.
California lenders overwhelmingly use a deed of trust rather than a mortgage. What practical difference matters most to a defaulting borrower?
Written to DRE's published topic list. Not a real examination question, since reproducing those is a misdemeanour under B&P Code section 123.