Alienation Clauses in Florida Mortgages
An alienation clause, commonly called a due-on-sale clause, gives a Florida mortgage lender the right to accelerate the loan and demand full repayment when the borrower transfers the property. This clause prevents unauthorized assumption of the mortgage by a third party.
Federal Preemption
The Garn-St. Germain Act of 1982 federally preempts state laws that would restrict enforcement of due-on-sale clauses. Florida lenders can invoke the alienation clause for any transfer of the property or a significant ownership interest in the entity holding the property. Attempts by borrowers to circumvent the clause through land trusts, LLC transfers, or contract-for-deed arrangements may still trigger the lender's acceleration rights.
Exempt Transfers
Federal law carves out specific exemptions. A transfer to a surviving joint tenant upon the borrower's death, a transfer between spouses or to a child incident to divorce, and a transfer into a revocable living trust where the borrower remains a beneficiary do not trigger the alienation clause. Florida attorneys advising clients on estate planning and family transfers must ensure the proposed transfer falls within these exemptions.
Related Terms
Barnes Walker Real Estate
Barnes Walker advises on property transfers, mortgage compliance, and alienation clause issues throughout Southwest Florida. Contact our real estate team for guidance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC