Due on Sale Clause

5 Replies

Hey Folks!

New to the scene here. Just had a lawyer due a warranty deed transfer to my LLC that I have recently created. Just curious, has anyone ever personally had a note due on sale (or in this case due on transfer)? Or has anyone ever heard of the bank actually exercising the Due on Sale clause? I'm just curious what peoples experiences have been. My property manager told me that I should create an LLC for the property and have it transferred in. My lawyer said that he has never seen a note get accelerated, but he did make sure I was aware of this risk. I actually had an off the record discussion with the mortgage banker in which he said that as long as I make current payments on it that there would be no problems. Just looking for others experiences! Kinda scary!

Thanks in advance,


I know of only one very active investor who had a note called by the bank one time when she transferred to her own LLC. The bank withdrew the acceleration when she contacted them and showed she owned the LLC. Acceleration is possible but very unlikely, especially in this time of low interest rates and a lot of problem loans.

@Seth Jacowski I operate in Bloomington-Normal, IL and have quit claimed deeds to my LLC without any problems from my banker. As long as you keep paying the mortgage on time, they generally don't care. Welcome to BP!

Thanks Michael! My property is actually back in my hometown in Janesville, WI. I have transferred it into my LLC.

It happened to this gentleman. Seems the trigger is when the hazard insurance is changed. 


The best solution I have found when talking to my attorney is to get an umbrella policy to "reduce" the risk. It is still insurance so if a law suit does happen unfortunately they will be investigating you for intent in order to decline the coverage. 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here