Reviewed by Casa Academy and updated July 29, 2026 using the current DBPR checklist and Pearson VUE scheduling guidance.
Alienation Clause
An alienation clause, often called a due-on-sale clause, requires the borrower to pay the loan in full when the property is transferred or when the owner encumbers the title without lender consent.
Exam context
Contrast assuming a loan with taking subject to existing financing. Alienation language pushes payoff unless assumption is approved. Watch for family transfer fact patterns that qualify for federal exceptions.
Due-on-sale in plain language
Lenders use alienation clauses to prevent new buyers from leaving low-rate legacy loans in place after a sale. The clause does not block the sale itself; it triggers payoff of the existing lien unless an exception applies or the lender waives enforcement.
Common exam exceptions
The Garn-St Germain Depository Institutions Act limits enforcement in specific family transfers, certain junior lien situations, and leaseholds under stated conditions. Questions may ask whether a transfer to a spouse or child triggers due-on-sale; statutory exceptions often apply.
Examples
Sale without payoff
A seller deeds property to a investor who keeps the old loan in place without lender approval. The lender may invoke the alienation clause and demand immediate payoff.
Inherited residence
A borrower dies and the home passes to a relative who will occupy it. Federal law may bar the lender from enforcing due-on-sale in that scenario if requirements are met.
Keep studying
Related terms
- Acceleration clauseDeclares the full balance due after default or trigger events.
- Adjustable-rate mortgageLoan product often containing due-on-sale language in the note.
Related resources
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- Real estate glossary hub
Browse all published national glossary entries.
- Florida exam topic hub
Florida-specific explainers and question sets for this topic area.
Sources
- CFPB: due-on-sale clauses(Consumer Financial Protection Bureau)