What might happen if a borrower transfers title of the property without the lender's consent?

Transferring the title of a property without the lender's consent is typically a violation of the loan agreement's terms. Most mortgage agreements include a "due-on-sale" clause, which allows the lender to demand immediate payment of the full loan balance if the borrower sells or otherwise transfers ownership of the property. This clause is in place to protect the lender's security interest in the property.

When a borrower transfers title without notifying or obtaining permission from the lender, it raises concerns about who is now responsible for the mortgage. The lender may be uncomfortable with the change in ownership since it might affect the borrower's ability to repay the loan, or the new owner may not be a suitable borrower from the lender's perspective. Therefore, the lender has the right to enforce the terms of the mortgage by calling the loan due, demanding that the borrower pay off the outstanding balance immediately.

This potential consequence underlines the importance of borrowers being aware of their obligations under the terms of their loan agreements, particularly regarding property transfers.