Final answer:
Additional clauses in a Seller Take Back Mortgage may include a due-on-sale clause, subordination clause, and prepayment penalty clause, each designed to protect the interests of the parties involved and make the terms of the agreement clear.
Step-by-step explanation:
When dealing with a Seller Take Back Mortgage (STB), there are additional clauses that parties may include in their agreement to protect their interests and ensure clear terms of the deal. These may include a due-on-sale clause, which stipulates that the balance of the mortgage is due if the property is sold; a subordination clause, determining the position of the STB in relation to other liens or mortgages; and a prepayment penalty clause, which may impose a fee if the buyer decides to pay off the STB earlier than agreed. Each clause serves to define the legal and financial implications of the STB, making the terms more explicit for both the buyer and the seller. For instance, with a due-on-sale clause, sellers can protect their investment by ensuring they receive payment when the property changes hands, while a subordination clause can affect the seller's lien priority relative to other creditors. Prepayment penalties are meant to deter the buyer from refinancing or paying the mortgage early, providing the seller with a degree of financial predictability.