What is another name for a due on sale clause in a real estate contract?

A due on sale clause is often referred to as an alienation clause. This term is used because the clause typically stipulates that if the property is transferred or sold (alienated) to a new owner, the lender has the right to demand full repayment of the outstanding loan. The primary purpose of this clause is to protect the lender's interests by ensuring that they have control over who may assume the mortgage and under what terms.

The alienation clause serves as a mechanism for the lender to potentially reassess the creditworthiness of a new borrower if the property is sold. This way, lenders can mitigate risk associated with changes in ownership and borrower profiles, ensuring that they are protected in the event of a transfer of property.

While other terms such as purchase option clause, transfer clause, and prepayment clause denote important aspects of real estate transactions, they do not convey the same meaning as the due on sale clause. The purchase option clause relates to an option for the buyer to purchase a property at a later date, the transfer clause generally refers to the conditions under which property can be transferred, and the prepayment clause deals with the terms regarding the repayment of the loan before its maturity date.