An alienation clause, also known as a due-on-sale clause, is a real estate agreement that requires a borrower to pay the remainder of their mortgage loan off immediately during the sale or transfer of a property title and before a new buyer can take ownership.

What does an alienation clause in a loan do?

In mortgage terms, an alienation clause is a provision in the contract signed with the lender that states that the borrower must pay the mortgage in full before the borrower can transfer the property to another person. An alienation clause goes into effect whether the property transfer is voluntary or involuntary.

What is the difference between acceleration clause and alienation clause?

While an alienation clause is activated when you sell your home, an acceleration clause becomes effective when you fail to meet a requirement of your loan terms. The most common reason is a missed mortgage payment. Both clauses require you to pay back the full balance owed on your loan with accrued interest at once.