Which of the following clauses allows a mortgage lender to call a loan due upon selling the property?

The correct answer is the clause that allows a mortgage lender to call a loan due upon the sale of a property, known as a due-on-sale clause. This provision, often included in mortgage agreements, empowers the lender to demand full payment of the outstanding loan balance if the property is sold. The rationale behind this clause is to protect the lender’s interests, ensuring they have control over who assumes the mortgage and under what terms.

An alienation clause is sometimes used interchangeably with a due-on-sale clause; however, it generally refers to the borrower's restriction on transferring ownership or interest in the property without the lender's consent. Although related, not all alienation clauses specifically call for the debt to be repaid upon sale in the same manner that a due-on-sale clause does.

Hypothecation refers to the pledging of collateral for a loan without giving up possession of it. It does not involve the specifics of loan repayment conditions upon property sale.

A prepayment penalty clause imposes a fee on the borrower for paying off the loan early, which is unrelated to whether the loan can be called due upon the sale of the property. This clause mainly provides the lender with assurance against potential losses due to early repayments.

In summary, the due-on-sale