Due on Sale Insurance
The Problem You Can’t Ignore: The Due on Sale Clause
The due on sale clause isn’t just a small line in your mortgage — it’s a what hangs over your head for the life of the mortgage... If triggered, it allows the lender to demand full repayment of the loan immediately. No matter how careful or creative you are, the due on sale clause is there. That's what makes subto real estate risky. ("subto" = sold subject to the mortgage staying in place)
Why the Due on Sale Clause Exists
Lenders include this clause to safeguard their investments:
Protecting Lender Interests: Lenders want the right to foreclose if the borrower no longer owns the property. That's not who they lent to, and the new owner's credit score isn't on the line so it's a risk for the bank because the owner may not be motivated by credit score.
Unqualified Borrowers: They need assurance that whoever takes over the property can meet the financial obligations.
It makes sense — on paper. But for creative finance real estate buyers, sellers, and agents, it's looming threat.
What Triggers the Due on Sale Clause
Any time you sell a property without the lender’s approval, the due on sale clause is triggered. Even if you’ve done everything "right," you're not impervious to the due on sale clause. Even if you do a partial transfer, or some creative form of concealed transfer, it's still a violation of the mortgage.
The Pain of Enforcement
Lenders don’t always enforce the due on sale clause. But when they do, there are limited options and a definite timeline, or the consequence is severe.
Full Loan Repayment: The lender can demand the entire balance of the loan immediately.
Risk of Foreclosure: If you can’t pay, the bank can foreclose.
And here’s the kicker: even if due on sale enforcement is rare, the threat of it never goes away. You can’t predict when a lender might decide to act, which makes the due on sale clause a ticking time bomb.
The Myth of Avoidance
Some investors try to sidestep the clause with creative strategies:
Land Trust: This obfuscates ownership changes --- but doesn’t eliminate the risk.
Contract for Deed: Seemingly "less official" than a full deed transfer, a contract for deed may reduce the risk, but certainly doesn't eliminate it..
Lease Option: A more complex relationship, turning buyer and seller into landlord and tenant, the option to purchase still violates the due on sale clause.
The truth is, you can’t outsmart the due on sale clause. No strategy guarantees safety, and if the lender catches wind of a transfer, they can accelerate the loan. And if they accelerate and you don't pay, they foreclose.
The Solution: Reduce Risk and Guarantee Resolution
The due on sale clause isn’t going away. You can’t avoid it, but you can:
Reduce Risk: Careful planning and deal structuring can help minimize red flags.
Due on Sale Remediation: When risk turns into reality, you can have due on sale specialists fix it for you. (Creative TC fixes due on sale)
BUT, what if you wanted to know it would be handled without additional out-of-pocket expenses? That's where DOS Guard comes in.
Can I Get Due on Sale Insurance?
DOS Guard offers a Due on Sale Guarantee — a flat-fee service that ensures you’re protected if the due on sale clause is ever enforced. Unlike creative strategies that rely on hope, DOS Guard guarantees resolution.
Flat Fee at Closing: Pay once and never worry about out-of-pocket costs again.
Proven Track Record: Their team and partners have resolved dozens of due on sale incidents.
Facing the Truth
The due on sale clause is a problem you can’t ignore. It’s in every mortgage, and no matter how unlikely enforcement seems, the consequences are too severe to risk.
You can’t eliminate the clause, but you can protect yourself. By reducing risk and buying DOS Guard, you can confidently move forward with subto real estate deals. If the due on sale clause is triggered, your solution is already in place.
DOS Guard can't remove the due on sale clause, but they can guarantee you won’t face it alone.
Check out DOS Guard today: dosguard.io
