Wow, don’t sound so worried… the due on sale clause isn’t as frightening as it sounds and maybe, just maybe, it might the solution you’ve been wishing, hoping or praying for.

While some people will tell you “oh my gosh, don’t let someone take over your payments”  I’d be confident betting one million dollars that person has NEVER followed by saying “there’s no need to worry, I’ll make your payments until the house sells”.

I spent a lot of money recently ($350 per hour) to have my attorney spend his time and my hard earned money to put into writing his legal opinion on “the due on sale clause and letting someone take over my payments.”  And guess what, he told me what I already knew, but didn’t have in writing, in plain English, from a real estate attorney.  There is nothing illegal about letting someone take over my payments, your payments or anyone’s payments. The due on sale clause is exactly that – just another clause in the mortgage.

Does every loan contain a “due on sale clause in Texas”?

99.99% of the time they do (and everywhere else in the country) and the Due on Sale Clause  says…  if the current owner of the property sells or otherwise transfers ownership the bank can immediately say “I want all my money”.  Yup they do.   And if you don’t give them all their money when they ask for it.  Their only option is to foreclose.

Now how many of you out there, think a bank who is receiving their payments (who cares who’s name is on the check), would want to foreclose.   Countrywide went out of business because it foreclosed on too many people and I would bet a whole lot of money NOT one of them was related to the due on sale clause.   Banks don’t make money foreclosing on properties.  They make money by taking in monthly payments.  And if Jessica sends in a payment, for Fred.  Bank of America (the company who swallowed Countrywide) is not really going to care.

Because I paid a lot of money for my attorney’s legal opinion, I don’t share it here in detail.  For anyone who may need to sell and letting someone take over their payments is a consideration.  If you talk with me, I’m more than happy to share the legal opinion with you, once we’ve developed our personal relationship.  I’m also more than happy to provide you with the name of my attorney as well.

But what would happen if the bank used the due on sale clause and called the loan due?

You just transfer the property back to the original seller to make the bank happy and draft different legal documents to protect any investment made by the buyer of the property.  In 25 years of practicing real estate law my attorney said he’s seen the banks call the loan due one time.

So if you can’t make the payments or the vacant house payments (or high payments) are killing you…. there is a 100% guarantee it will go to foreclosure,  wipe out your savings or you’ll have to get a 2nd job just to make your payments.

Versus a .000000001% chance the lender MIGHT exercise the due on sale clause and call the loan due if you let someone take over the payments.

When someone tells you “oh my gosh, don’t let someone take over your payments”, I recommend saying “OK, will you go ahead and make my payments while we wait for the house to sell”.  If they say yes, I highly recommend you take their advice and their money.

I’ve worked with a lot of families lately who wanted to take advantage of buying a spectacular deal but didn’t want to give away the farm just to sell.  Hugely discounted deals sell even in this tough market but do you want to give away $10,000 – $20,000 in equity just to compete with HUD foreclosure and Bank REO property prices? Even in Texas which has been pretty insulated from the housing crisis is experiencing this challenge.

Ty & Brandi, a family I worked with a year or so ago… they didn’t “need to” buy that fabulously brand new home in Austin Texas that was cheaper than its been in 20 years.  But it was their dream home that they could finally afford.  They could actually afford to leave their old property vacant while it tried to sell… and their friend told them “don’t let someone take over your payments”.

But Ty, he loves Excel, and he punched all the numbers into Excel.  How much equity he was walking into by buying his dream home at such a discount.  How much money he’d save by not having ANY vacant house payments.  The number of months it would take for the vacant house to wipe out their savings.  And Excel totaled it all up and for him it was worth that .000001% chance the lender might asked to be paid in full.  And a year and a half later, we’re still making Ty’s payments on time, every month.  If we end up working together, ask me for Ty’s number, he’d be happy to provide a reference.

If you’ve got a property anywhere in the Austin Texas area and you’re thinking about selling.  Talk to me.  I buy and sell in this market every day.  If you want to go the listing route, Joseph Rios is the realtor on our team.  If  listing doesn’t work, we can always discuss other options and most likely letting us take over your payment may be one of them.  And it doesn’t hurt to have options does it?  The better you understand your options, the better you’ll feel about your choice.

Wishing you and yours a wonderful week.

Your Due on Sale Clause Specialist in Texas

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Due on Sale Clause Related by Jessica