What is an alienation clause in real estate?

An alienation clause is common in most mortgage contracts. But what is alienation in real estate? This is a provision that requires a home seller to repay their mortgage balance at the time of sale. Here’s what that means for the current homeowner and, sometimes, for the homebuyer as well.

What is a mortgage alienation clause?

The clause provides assurances to the lender that the debt will be fully repaid in the event of a real estate sale or if the property is transferred to another party. The alienation clause essentially releases the borrower from their obligations to the lender since the proceeds from the home sale will pay off the mortgage balance.

When does an alienation clause go into effect?

It goes into effect regardless of whether the transfer is voluntary or not. This clause is standard in most mortgage agreements today. Typically, when a mortgaged property transfers ownership, an alienation clause requires the previous owner to repay the loan’s remaining balance right away.