[WSBARP] Due on Sale Clause

[Mark Anderson]

Dear Listmates:

Client wants to transfer title to property with a house in which she lives to her Trust.  The property is encumbered by a deed of trust that has a due on sale clause.  12 CFR § 191.5 prohibits a lender from exercising its option pursuant to a due on sale clause where the transfer is "into an inter vivos trust in which the borrower is and remains the beneficiary and occupant of the property...."  Besides meeting these criteria, do any of you have any tips or comments about relying on this prohibition before quitclaiming the property into the Trust?

That CFR also gives the following exception to the prohibition:
"... unless, as a condition precedent to such transfer, the borrower refuses to provide the lender with reasonable means acceptable to the lender by which the lender will be assured of timely notice of any subsequent transfer of the beneficial interest or change in occupancy."
Does anyone know how such a "condition precedent" would arise?  Or is this saying that the condition precedent to the prohibition is the borrower's offer of "reasonable means acceptable to the lender"  This would still seem to require the lender to give permission for the transfer.

Thanks in advance.

Mark B. Anderson
ANDERSON LAW FIRM PLLC
821 Dock St  Ste 209  PMB 4-12
Tacoma, Washington 98402
+1 253-327-1750
+1 253-327-1751 (fax)
marka at mbaesq.com<mailto:marka at mbaesq.com>
www.mbaesq.com<http://www.mbaesq.com/>
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