In the case of a purchase money mortgage, which clause allows the lender to declare the loan due upon transfer?

In the context of a purchase money mortgage, the clause that allows the lender to declare the loan due upon transfer is known as the alienation clause. This clause serves to protect the lender's interest in the property by requiring that if the borrower sells or transfers the property, the full outstanding balance of the loan must be paid. Essentially, it enables the lender to maintain control over who they are lending to, as a new buyer may not be a suitable borrower.

This feature is crucial for lenders because it ensures that they can reassess the financial risk associated with the loan if the property changes hands. If the borrower transfers the property without addressing the loan obligation, the lender has the right to demand payment in full, thereby preventing the new owner from assuming the mortgage automatically.

The other clauses mentioned serve different purposes. For instance, an acceleration clause allows a lender to demand the full balance due if certain conditions are met, but it is not specifically tied to transfers of property. A defeasance clause typically indicates that once the loan is paid off, the lender's claim to the property is void; and hypothecation refers to the pledging of property as collateral for a loan without giving up possession. Thus, the alienation clause is specifically designed to address