What is indicated by "Due on Transfer - Strict" in a Deed of Trust?

What is indicated by "Due on Transfer - Strict" in a Deed of Trust?

• A. The loan can be assumed without any conditions
• B. The entire loan balance must be paid upon sale
• C. The loan is automatically forgiven on transfer
• D. The loan is transferable with seller approval

Answer: (B)

"Due on Transfer - Strict" in a Deed of Trust indicates that the entire loan balance must be paid in full whenever the property is sold or otherwise transferred. This condition acts as a protective measure for the lender, ensuring that they can demand full repayment of the loan at the time of transfer. It restricts the borrower's ability to transfer the property without settling the existing loan, leading to the requirement of paying off the entire amount. This option is particularly relevant in scenarios where lenders want to maintain tighter control over the loans they have extended, as it prevents unintended or automatic assumptions of the mortgage by a new owner.

"Due on Transfer - Strict" in a Deed of Trust indicates that the entire loan balance must be paid in full whenever the property is sold or otherwise transferred. This condition acts as a protective measure for the lender, ensuring that they can demand full repayment of the loan at the time of transfer. It restricts the borrower's ability to transfer the property without settling the existing loan, leading to the requirement of paying off the entire amount. This option is particularly relevant in scenarios where lenders want to maintain tighter control over the loans they have extended, as it prevents unintended or automatic assumptions of the mortgage by a new owner.