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Due-on-sale clauses require full loan repayment upon property transfer. Exceptions exist, including transfers due to death, divorce, or family transfers.
What is a trust deed transfer?
A deed of trust is a document sometimes used instead of a mortgage to transfer a property title to a third party such as a bank, escrow company, or title company until the borrower repays their debt to the lender.
What triggers the due-on-sale clause?
The difference is a due-on-sale clause is triggered when you sell or transfer your property without the lenders consent, whereas an acceleration clause goes into effect when you miss mortgage payments, file for bankruptcy or fail to fulfill your loan requirements in some other way.
What is the disadvantage of a deed of trust?
Disadvantages of a Trust Deed For borrowers, if financial circumstances change, default on repayment can result in property foreclosure. Late payments should be avoided to prevent escalation and property loss.
Why do lenders prefer a deed of trust over a mortgage?
Foreclosure details: When your lender forecloses with a deed of trust, the process will usually take less time and money to complete. However, foreclosure with a mortgage can be a lengthy process since you must go through the courts. Therefore, it can eat up a lot of time and money.
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Does transfer to trust trigger due-on-sale clause?
As long as you are the sole beneficiary of the land trust, this transfer is generally exempt from triggering the due-on-sale clause under the Garn-St. Germain Act.
Does a trust trigger due-on-sale clause?
This means that a homeowner can transfer their property into a trust without triggering the due-on-sale clause, as long as they remain a beneficiary and occupant of the property.
Does a trust deed include a power of sale clause?
Deeds of trust almost always include a power-of-sale clause , which allows the trustee to conduct a non-judicial foreclosure - that is, sell the property without first getting a court order.
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