Which clause allows a lender to call the entire loan amount due when the property is sold?

The due-on-sale clause is a provision included in mortgage contracts that gives the lender the right to demand the entire loan amount to be paid off if the property securing the loan is sold or transferred to another party. This clause protects the lender's interests by ensuring they can either collect the remaining balance or re-evaluate the lending terms with a new buyer, who may present different credit risks compared to the original borrower.

In situations where a property is sold, without this clause, the existing loan could theoretically remain in place with the new owner, leading to complications for the lender regarding loan performance and terms. The inclusion of a due-on-sale clause ensures that lenders maintain control over who is responsible for the mortgage and mitigates risks associated with changes in ownership.

The other clauses mentioned serve different purposes: the escrow clause typically relates to the management of escrow accounts for property taxes or insurance payments, the insurance clause governs the need for insurance coverage on the property, and the acceleration clause allows lenders to declare the full amount due if a borrower defaults on payments. Each serves a unique function within loan agreements but does not specifically address the lender's rights when a property is sold.