How to avoid the due-on-sale clause if you want to transfer the deed?

A due-on-sale clause is a common provision in most mortgage agreements, requiring the borrower to pay the outstanding balance upon transfer of the property's ownership. However, certain circumstances may arise where a property owner may wish to transfer the deed without triggering this clause.

Here are some strategies to avoid triggering the due-on-sale clause:

1. Transfer the property to a trust - By transferring the property to a trust, the owner retains control over the property while the trust holds the title. The trust can then transfer ownership without triggering the due-on-sale clause.

2. Transfer the property to a family member - The due-on-sale clause generally does not apply when transferring ownership to a family member, such as a spouse or child. However, it's important to consult with a real estate attorney to ensure compliance with any legal requirements.

3. Assume the mortgage - Some mortgages allow for the assumption of the loan by a new borrower, which may avoid triggering the due-on-sale clause. However, the new borrower must meet certain qualifications, and the lender must approve the assumption.

4. Sell the property on a land contract - A land contract is a seller-financed agreement in which the buyer makes payments directly to the seller. This allows for the transfer of ownership without triggering the due-on-sale clause.

5. Consult with the lender - In some cases, the lender may be willing to waive the due-on-sale clause, particularly if the transfer is due to financial hardship or other extenuating circumstances.

Navigating the due-on-sale clause can be complex, and it's important to consult with a real estate attorney to ensure compliance with any legal requirements. By utilizing these strategies, property owners may be able to transfer ownership without triggering the due-on-sale clause and avoid potential financial penalties.