[WSBARP] Due on Sale Clauses and Real Estate Contracts

[Jan Kelly]

I had one of these recently. The loan docs required lender approval, so I
contacted the lender and was granted approval for the REK in writing. It
was much simpler than I thought, but I'm sure the results differ among
lenders.

On Wed, Dec 6, 2023 at 4:07 PM Paul Neumiller <pneumiller at hotmail.com>
wrote:

> 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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-- 


*Jan Kelly, JD/MBA*Attorney at Law

JK Law
PO Box 1964
Poulsbo, WA 98370
Direct Line (702) 338-6733

*Licensed in Nevada and Washington*.


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