Question

If a due-on-sale clause is to be included in the note, which of the following is true?

1) It should be included in the deed on trust
2) It must be set forth in a separate agreement
3) It cannot be included in the Deed of Trust
4) It must be approved by an attorney

Answer 1

If a due-on-sale clause is to be included in the note, it is typically set forth in a separate agreement rather than being included in the deed of trust or the trust itself. Seek legal advice when drafting and including a due-on-sale clause in a real estate transaction.

Step-by-step explanation:

If a due-on-sale clause is to be included in the note, it is typically set forth in a separate agreement rather than being included in the deed of trust or the trust itself.

This separate agreement is often called a due-on-sale clause addendum or addendum to the note. Including the due-on-sale clause in a separate agreement allows for more flexibility and easier enforcement of the clause.

While it is not required to be approved by an attorney, it is highly recommended to seek legal advice when drafting and including a due-on-sale clause in a real estate transaction. An attorney can ensure that the clause is properly worded and enforceable, and can provide guidance on how the clause may affect the parties involved.