Due-On-Encumbrance Clause
/ˌduː.ɒn.ɪnˈkʌm.brəns klɔːz/
Definitions
- (n.) A mortgage provision allowing the lender to demand full repayment if the property is encumbered by another lien or if ownership changes.
The due-on-encumbrance clause enabled the bank to call the loan when the borrower took out a second mortgage.
Forms
- due-on-encumbrance clause
- due-on-encumbrance clauses
Related terms
See also
Commentary
This clause is primarily used by lenders to protect their security interest against third-party claims or transfers without consent.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.