Legal Question in Real Estate Law in California
alienation clause
I understand ''due on sale'' or ''alienation clauses'' were outlawed in California. Is that true and if so what would the validity of such a clause be in a note dated 04/2000
3 Answers from Attorneys
Re: alienation clause
That information is incorrect. Due on sale clauses are legal, and enforced by Federal law, which pre-empts state law.
However, there are loans that have prepayment penalties. If the loan has a due on sale clause that the lender enforces, they may not collect a prepayment penalty.
There are some other cases that get around the due on sale clause, but they are few and far between, and require very specific situations.
Re: alienation clause
The due-on-sale clauses are allowed, with some exceptions, like placing your personal residence into a revocable living trust, or close relatives inheriting the personal residence. If you don't fit into an exception, they are enforceable.
Re: alienation clause
The federal law 'reinstating' the power of California lenders to enforce due-on-sale clauses became effective October 15, 1985. Hence, a loan made after that date could be made due on sale whether the lender was state or federal.
Related Questions & Answers
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
