What happens to a grantee if they transfer property without creditor consent under a due-on-sale clause?

When a grantee transfers property subject to a due-on-sale clause without the consent of the lender, the lender has the right to demand that the entire loan balance becomes due immediately. The due-on-sale clause is a provision in a mortgage agreement that enables the lender to accelerate the debt repayment if the borrower transfers the property without the lender's approval. This clause is included to protect the lender’s interests by ensuring that they have control over who is occupying the property and are able to review the creditworthiness of any new owner.

In this scenario, when the grantee does not seek or obtain the necessary consent before transferring the property, the lender can exercise its rights under the due-on-sale clause. This action ensures that the lender can address any potential risks associated with the transfer and maintain oversight of the loan. Thus, the immediate obligation for the grantee to pay the entire loan balance arises as a consequence of violating this clause.