What Counts as a “Transfer” Under a Due‑on‑Sale Clause?

Federal law defines a “due‑on‑sale clause” as a provision that allows a lender to accelerate if the property, or an interest in it, is “sold or transferred” without prior written consent. 12 U.S.C. § 1701j‑3(a)(1).

12 C.F.R. § 191.2(b) defines what counts as a "sale or transfer":

(b) . . . For purposes of this definition, a sale or transfer means the conveyance of real property of any right, title or interest therein, whether legal or equitable, whether voluntary or involuntary, by outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three years, lease-option contract or any other method of conveyance of real property interests.

A transfer under a due‑on‑sale clause therefore generally includes any change in ownership or interest in the property, whether direct or indirect.

The analysis focuses on whether the borrower has transferred a legal or beneficial interest in the real property—not on whether the borrower remains involved, continues making payments, or retains some practical control.

For the definition of due-on-sale clause, see What Is a Due‑on‑Sale Clause?.

For related posts and primary authority, see: Due‑on‑Sale Clause.