Transferring Real Property - Due-On-Sale Clauses

Another factor you will need to take into consideration when transferring real property to your living trust, is whether or not there is a due-on-sale clause that is written into your mortgage. If this type of clause is part of your mortgage, the bank or lending company may be allowed to call the loan as a result of the real property transfer to your trust. Under this clause they have the right to declare due any and all outstanding balances owed on the loan if the property is sold or transferred without the consent of the lender.

However, even if your property has a due-on-sale clause, a transfer to your trust may be exempted under an act known as the Garn-St. Germain Depository Institutions Act of 1982 if the property meets certain qualifications.

As always, when considering transferring real property into a living trust, please contact a professional estate litigation Attorney.

*This blog entry was not written by an Attorney and should not be constituted as professional legal advice.