Why does L/O violate DOS? - Posted by James Buster
Posted by James Buster on July 08, 2002 at 20:07:54:
St-Germaine prevents the lender from calling the loan due merely because the property is no longer owner-occupied e.g. leased to third party. Why is the L/O deemed a constructive sale violating the lender’s due-on-sale clause when the sale isn’t actually consummated until the option is exercised? The option clouds title, sure, but since it’s junior to the lender’s lien it seems no more a nuisance than a 2nd mortgage would. So where, exactly, is the legal beef?