What is another name for an alienation clause?

An alienation clause, often referred to as a due-on-sale clause, is a provision typically found in mortgage agreements. This clause gives the lender the right to call the loan due and payable if the property is sold or transferred without the lender's approval. Essentially, this clause protects the lender by ensuring that they retain control over who is responsible for paying back the loan, thus preventing the borrower from transferring the loan to someone else without the lender's consent.

The significance of this clause is that it can impact the borrower’s ability to sell the property freely, as they must address the loan terms and the lender's rights first. This means that upon the sale of the property, the lender can demand full repayment of the outstanding loan balance, thus "alienating" the borrower from the original contract under the new ownership.

Other options present terms associated with loan contracts but serve different functions. A prepayment clause relates to the terms governing early repayment of the loan, a lock-in clause restricts the borrower from refinancing or paying off the loan early, and a cross-default clause connects the default status of one loan to others that the borrower may hold. None of these directly corresponds to the concept of controlling the sale or transfer rights of a property under an alienation