To determine if your mortgage includes an alienation clause, which allows lenders to demand full repayment upon property transfer, review your original loan documents for “due-on-sale,” “transfer of ownership,” or “alienation” keywords. You can also check your online mortgage account or contact your servicer directly. How to identify alienation clauses in your loan agreement is crucial to avoid triggering loan acceleration or foreclosure when transferring property, even to family, as most modern mortgages contain this provision, with limited federal exceptions.
In this comprehensive guide, we’ll explain:
- What an alienation clause is
- How to find out if your mortgage includes one
- What to do if you discover it does
- Smart strategies to avoid triggering it
- Key exemptions under federal law
- Actionable next steps to safeguard your property transfer
Let’s get started.
What Is an Alienation Clause?
An alienation clause—also known as a due-on-sale clause—is a standard provision in most modern mortgage agreements. It gives the lender the right (but not the obligation) to demand full repayment of your loan if you transfer ownership of the property without their permission.
Why It Exists
Lenders use this clause to:
- Protect against unqualified new owners taking over a loan
- Maintain control over who holds the mortgage
- Ensure the terms of the agreement remain valid
Example: If you owe $250,000 on your mortgage and decide to give your home to your daughter as a gift, your lender could require you to repay the entire loan immediately, even if you’ve never missed a payment.
How to Know If Your Mortgage Has an Alienation Clause
Most mortgages today do include an alienation clause—but don’t assume! Here’s how to check:
1. Review Your Mortgage or Deed of Trust Documents
Locate your original mortgage documents (or request a copy from your lender or title company). Look for keywords like:
- Due-on-sale
- Transfer of ownership
- Acceleration clause
- Alienation
Sample Wording:
“If all or any part of the Property or an interest in the Property is sold or transferred… without Lender’s prior written consent, Lender may require immediate payment in full of all sums secured by this Security Instrument.”
2. Log into Your Mortgage Account
Some lenders provide downloadable versions of your mortgage contract via your online portal. Use the search function (Ctrl+F or Cmd+F) to look for relevant terms.
3. Call or Email Your Mortgage Servicer
If you’re unsure, contact your mortgage servicer and ask:
“Does my mortgage include an alienation clause or due-on-sale clause, and what are the conditions under which it can be triggered?”
Keep a record of their response for future planning.
Why It Matters: What Happens If You Violate the Clause?
If you transfer ownership without meeting the lender’s conditions or using a legal exemption, your lender may:
- Demand immediate full repayment of the mortgage
- Accelerate the loan, meaning all remaining payments are due at once
- Begin foreclosure proceedings if the balance is not paid
- Deny any loan modification or assumption requests
This can be devastating for heirs, especially if they can’t afford to refinance or buy the home outright.
When You’re Safe: Exceptions Under Federal Law
Fortunately, not all transfers activate the alienation clause. Under the Garn-St. Germain Depository Institutions Act of 1982, lenders cannot enforce the clause in specific situations:
Exempt Transfers Include:
- Transfer to a spouse due to death or divorce
- Transfer to a child or heir following the borrower’s death
- Transfer to a living revocable trust where the borrower remains a beneficiary
- Transfer to a joint tenant upon death of another joint tenant
- Lease of property for less than 3 years without an option to purchase
These are your safe zones—but you must structure the transfer correctly.
What To Do If Your Mortgage Has an Alienation Clause
If you confirm your mortgage contains an alienation clause, here’s how to proceed:
1. Avoid Unauthorized Transfers
Do not:
- Add someone to the deed without legal advice
- Transfer ownership without contacting your lender
- Use a quitclaim deed unless you’re certain it falls under a legal exemption
2. Use a Revocable Living Trust
Transferring property into a revocable trust while you’re alive (and remain a beneficiary) does not trigger the alienation clause. This is an excellent estate planning strategy for:
- Avoiding probate
- Protecting your mortgage
- Ensuring your property goes to your intended heirs
3. Consider a Transfer-on-Death (TOD) Deed
In states that allow it, a TOD deed lets you name a beneficiary who will inherit the home upon your death.
- Doesn’t transfer ownership during your lifetime
- Bypasses probate
- Usually doesn’t violate your mortgage agreement
Check your state’s laws, as TOD deeds aren’t available everywhere.
4. Communicate with Your Lender
If you plan to transfer ownership due to marriage, divorce, or estate planning, ask your lender for written confirmation of how the clause will be treated.
Planning Example: The Right vs. Wrong Way
Incorrect:
- John adds his daughter to the deed without setting up a trust.
- His lender calls the loan due immediately.
- John cannot pay $210,000 at once.
- The property is foreclosed.
Correct:
- John sets up a revocable trust with himself as trustee and names his daughter as successor.
- He transfers the home into the trust.
- Upon John’s death, the daughter inherits the home without lender interference.
Quick Comparison: Mortgage Clause Triggers
| Action | Triggers Clause? | Safe? |
| Gifting property to a child | ✅ Yes | ❌ Risky |
| Inheriting a home upon death | ❌ No | ✅ Safe |
| Transferring to revocable trust | ❌ No | ✅ Safe |
| Adding a non-spouse to the deed | ✅ Yes | ❌ Risky |
| Using a TOD deed (if allowed) | ❌ No | ✅ Safe |
Frequently Asked Questions
Can I add my child to the deed to avoid probate?
This can trigger the alienation clause. A revocable trust or TOD deed is a safer option.
What if I just leave the mortgage in my name but transfer ownership?
The lender can still demand payment under the clause. Silent transfers can backfire.
Will the lender always enforce the clause?
Not always—but it’s a risk. Some lenders may allow the transfer if the mortgage remains current, but you can’t count on that.
Actionable Steps to Take Right Now
- Locate and review your mortgage agreement.
- Check for due-on-sale or alienation clause language.
- Consult an estate planning attorney if you intend to transfer property.
- Use protected methods like revocable trusts or TOD deeds.
- Communicate with your mortgage servicer before making any ownership changes.
Final Thoughts: Protect Your Home and Legacy
Your home is likely one of your most valuable assets. Transferring it without understanding your mortgage’s fine print can result in foreclosure, unexpected debt, and family strife.
By confirming whether your mortgage includes an alienation clause and planning accordingly, you can:
- ✔️ Avoid triggering loan acceleration
- ✔️ Protect your family’s future
- ✔️ Maintain control over how your property is passed down
Next Step: Talk to your estate attorney and request a mortgage review to ensure your plans align with legal and lender requirements.
Your home. Your rules. Your legacy—protected.