A promissory note in California contains a 'due-on-sale' clause. The borrower sells the property to a new buyer without informing the lender. What right does this clause give the beneficiary?
Correct Answer
D) The beneficiary can accelerate the loan and demand full payment of the remaining balance
A due-on-sale clause (alienation clause) gives the beneficiary the right to accelerate the loan — demanding full payment of the outstanding balance — if the property is transferred without the lender's consent. This is enforceable under the Garn-St. Germain Act and California law.
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A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
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