I suspect banks would more typically use the broader anti-alienation term, as opposed to the narrower term (but I wasn’t sure what others were experiencing, so that’s why I made this post). So long as rates are relatively low, lenders may not want to get aggressive calling loans due for violations of anti-alienation clauses; particularly if competing lenders have low/lower rates for these borrowers. However, if rates go up, this may change.

You’re getting ahead of me…this is in my 2nd post…it’s coming asap…

Thanks again for your input!!

Over the last several years, I’ve met several real estate investors doing just what you describe…simply ignoring due on sale/transfer clauses in their deals, often while also taking back an unrecorded QC Deed from the current owner. Clearly, these R/E investors risk trouble from the lender doing this. Unfortunately, so can many other people who do subsequent transferes of their property (which I’ll discuss in my 2nd post on this). So far, my experience has been the same as yours…the banks don’t seem to care about subsequent transfers of the collateral so long as the debt gets paid by someone, anyone. However, let rates go up, and we may be playing a whole different game…

…Hold it, I’m getting ahead of myself…that’s in my follow-up post.

I haven’t personally read them but when you think about it, would lenders tend to be more lax about protecting their investments or more lenient? I would suspect the terms would be broad and cover everything. However, as another reader pointed out, would lenders be aggressive and try to enforce those clauses when the alternative might be foreclosure? I suspect not. I suspect they are happy just to get the payments. That’s what I hear from the grapevine in Sacramento and from an escrow officer I know who deals exclusively in land contracts.

Sorry for the delay in responding to you. I had to run right at 5pm last Fri to make my weekend connection.

OK, thanks, that’s what I wanted to know…all new loans have anti-alienation terms. However, do you know if lenders are frequently using broad anti-anlienation terms, like due-on-transfer clauses; or are they more commonly using narrower anti-alienation terms, like due-on-sale terms?

It seems the bank just wants to make sure it is getting paid. If that is happening they are happy. Especially when the “subject to” buyer is bringing the loan back up to date.

Thanks for replying. A deed of trust, since it matches with a promissory note, may often carry the same provisions as the note it goes with (it’s actually better draftsmanship if terms match on both instruments).

If you don’t mind me asking, since I’m trying to get a sense for how widespread the use of these terms currently are, is this a relatively “new” loan…say w/in the last year?

My note AND deed of trust both have a “due on sale OR transfer” clause. The lender used FannieMae/FreddieMac form 3200.