due-on-sale clause

due-on-sale clause definition - business

due-on-sale clause

An inclusion in some loan agreements that requires full payment of unpaid principal and accrued interest in the event the borrower sells or transfers ownership of the asset being used as collateral for the loan. A loan with a due-on-sale clause cannot be assumed by the new owner without permission of the lender. Also called alienation clause.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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