due-on-sale clause

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A due-on-sale clause is a requirement in a mortgage or other loan agreement that the loan be paid in full if the house or asset is resold. These provisions can be triggered either by an entire sale or partial sale of the debtee’s interest in the asset. A due-on-sale clause adds protection to creditors, ensuring that loans are paid and that homeowners do not have a loophole for interest rates.

[Last updated in June of 2021 by the Wex Definitions Team]