Illinois Real Estate Exam Practice Question
A lender requested that the entire loan balance be paid immediately because the property on which the loan was made had been sold. What clause in the mortgage loan allows this?
Correct Answer: A
Rationale: The alienation clause allows a lender to demand full repayment of the loan if the property is sold, protecting their interests in the collateral.
The prepayment clause, on the other hand, pertains to the borrower's ability to pay off the loan early, often with potential penalties, but does not address property sales.
The condemnation clause relates to the lender's rights if the property is taken by eminent domain, not sales.
The defeasance clause typically nullifies the lender's interest once the loan is fully paid, but does not trigger immediate repayment upon a sale.
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