"Due On Sale" Clause
Most standard mortgages include a "due on sale" clause. The clause is a frightening thing because the mortgage company could demand you pay off the balance of the loan upon a "transfer" of the property from your name into the name of the trustee of your living trust (which most often is you). However, the clause does not apply to transfers of your residence into your living trust if you intend to continue living in the home. This is a result of federal law which exempts:
a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property.
In other contexts a transfer of property, a change in ownership, or other "sale" of the property may otherwise trigger the "due on sale" clause.
