Tennessee Real Estate Exam Practice Question
What clause in a mortgage allows the lender to demand immediate payment of the entire loan balance if the borrower transfers the property without permission?
Correct Answer: A
Rationale: The alienation clause allows the lender to demand full repayment of the loan if the borrower transfers ownership of the property without the lender's consent. This protects the lender's interests by ensuring that they can assess new owners.
Acceleration clauses, on the other hand, enable lenders to call the entire loan due if the borrower defaults on payments, not specifically related to property transfer. Subrogation refers to a lender's right to pursue a third party responsible for a debt, while subordination involves changing the priority of a debt in relation to other debts. Thus, only the alienation clause directly addresses unauthorized property transfers.
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