[WSBARP] Due on Sale Clauses and Real Estate Contracts

[Paul Neumiller]

What is the experience of people under this scenario (and I know I need to read the loan documents)?  Client wants to buy commercial property with an existing first lien.  Client doesn't have the money to pay off the first lien but the seller is willing to carry the balance financing.  Parties contemplate that the Client will pay both the existing loan and the seller carryback loan.  Title company is suggesting that a Real Estate Contract might be able to get around the Due on Sale Clause in the existing loan because title does not vest in the Client/Buyer until the financing is paid in full.  This doesn't quite pass the smell test for me.  In this age of rising interest rates (or, at least, higher interest rates), are lenders really not calling in their loans under the standard Due on Sale Clause if the parties use a Real Estate Contract?  What is the experience of the title companies?


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