7 FAQs About Alienation Clauses in Real Estate

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By Clever Real Estate Updated February 24, 2023


What is an alienation clause in real estate? What happens to your mortgage when you sell your home? What if you want to transfer your mortgage to another person? Keep reading to find out the answers to these questions and more.

7 FAQs About Alienation Clauses in Real Estate

If you have no idea what an alienation clause is, it sounds like something scary and foreboding. In reality, the concept is quite simple and alienation clauses are included in many financial contracts including mortgages and property insurance contracts.

In fact, you probably already know about the alienation clause, you just didn’t know what it was called.

Read these FAQs about alienation clauses in real estate and prepare to amaze your friends with your vast real estate knowledge.

1. What is an alienation clause in real estate?

Nearly all mortgages today include an alienation clause. This clause simply states something to the effect that transferring the property to another person’s name will cause the full amount of the loan to become due immediately. For example, if you are selling your home and transferring the title to someone else, you have to pay what’s left on your mortgage.

Simply because the clause is there, doesn’t mean the lender has to use it. There are also a few cases in which the lender is not permitted to take advantage of the clause. These include:

  • A surviving spouse (or joint-tenant) takes over the mortgage
  • The title is inherited (the heir must usually live in the residence)
  • The title is transferred because of divorce to an ex-spouse or child (must occupy the residence)
  • The title goes into a living trust
  • The mortgage doesn’t have an alienation clause
  • When taking out a second mortgage

2. What is the difference between an alienation clause and an acceleration clause?

An acceleration clause applies in the event that you breach the terms of your loan contract. This clause gives the lender the right to demand immediate repayment of the loan when you don’t hold up your end of the bargain.

An alienation clause is technically a type of acceleration clause. While other events of acceleration clauses are negative, an alienation clause is a normal part of selling a home.

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3. What triggers an acceleration clause?

Typically, acceleration clauses are triggered by missed payments. Be sure to read the terms of your loan carefully. Some terms give lenders the right to demand full payment of the loan in the event of only one missed payment. If you can’t pay, they can seize the property and sell it.

Keep up with your payments to avoid this scenario. If you are having trouble making a payment one month, be proactive and talk to your lender about options rather than simply not paying.

4. What is the difference between an alienation clause and a due on sale clause?

There is no difference. These terms are used to refer to the same thing.

5. How do I know if my mortgage has a due on sale clause?

Most mortgages issued after 1988 include a due on sale clause. But still, read your contract or ask your loan officer. You should always carefully read everything you sign anyway. Sit down and carefully go through your mortgage paperwork, keeping a sharp eye out for the alienation clause verbiage. Loan contracts are heavy reading — you may want to make yourself a cup of tea before you start.

A quicker way can be to ask your loan officer. When you first get your loan paperwork, read it and ask all your questions. A lot of money is on the line, you should thoroughly understand what you’re getting yourself into.

6. Which types of mortgage loans don’t have a due on sale clause?

Some types of government loans do not include alienation clauses. VA, USDA, and FHA fall into this category. These are known as assumable mortgages — meaning that another party can "assume" the loan.

This can happen when you decide to sell your home. The buyer can assume your loan rather than having to take out a whole new one. The point is to let buyers take advantage of a more favorable interest rate on the seller’s loan. When interest rates are low, this option may not be worth the hassle.

Keep in mind that you can’t just pass loans around like a hot potato. The lender will want to thoroughly vet the new mortgage holder first.

7. Can I transfer my mortgage to another person?

In some cases, yes. If your loan is an assumable loan like one of the government loans we just mentioned, you can transfer the mortgage. If the loan has a due on sale clause, things get trickier. However, there are still some cases in which you would be able to transfer it.

For example, your lender may allow you to transfer the mortgage to an immediate member of your family. Additionally, they may allow you to add someone to your mortgage — giving that person a legal right (and obligation) to make payments.

Sometimes people try to take advantage of this "loophole" to transfer mortgages sneakily. Remember, if you simply add the new owner to your loan, you are still on the hook if they stop paying on it.

Your Guide to Real Estate Paperwork

Alienation clauses are just one of a thousand things you must understand about real estate. With all that is at stake, you should never go into a deal without an expert at your side.

A good real estate agent is your advocate. They will provide guidance and advice for every confusing twist and turn that pops up throughout the transaction. They will ensure that a shrewd buyer’s agent doesn’t get you to unwittingly agree to something that is not in your best interest.

How do you find a trustworthy advocate? Let Clever recommend one of our thoroughly vetted partner agents. Contact us and we’ll put you in touch with an expert agent in your area.

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