DEFINITION of 'Alienation Clause'

A clause in a mortgage contract that requires full payment of the balance of a mortgage at the lender's discretion if the property is sold or the title to the property changes to another person. Nearly all mortgages have an alienation clause.

BREAKING DOWN 'Alienation Clause'

An alienation clause protects a lender by preventing a borrower from assigning debt without the lender's approval. An alienation clause protects the lender from credit risk of the original borrower, or third-party credit risk if the original borrower assigns the debt to another party.

RELATED TERMS
  1. Contingency Clause

    A contract provision that requires a specific event or action ...
  2. Due-On-Sale Clause

    A provision in a mortgage contract that requires the mortgage ...
  3. Defeasance Clause

    A mortgage provision indicating that the borrower will be given ...
  4. Power Of Sale

    A clause written into a mortgage authorizing the mortgagee (lender) ...
  5. Acceleration Covenant

    A clause included in certain debt securities and swap agreements ...
  6. IRS Publication 519 - U.S. Tax ...

    A document published by the Internal Revenue Service (IRS) that ...
Related Articles
  1. Personal Finance

    Tips for Choosing the Best Online Mortgage Lender

    Finding the right online mortgage lender can be a tall task. Here's some help on how to avoid wasting your time.
  2. Personal Finance

    How Do Mortgage Lenders Get Paid and Make Money?

    When homebuyers educate themselves on how mortgage lenders get paid and make money, they are more likely to save thousands of dollars on their mortgages.
  3. Personal Finance

    Conquering The Terms Of Your Mortgage

    Buyers with big down payments should get the best mortgage terms. Unfortunately, the equation isn't that simple.
  4. Personal Finance

    How Regulations Protect Reverse Mortgage Borrowers

    They're complex animals, which is why there are government guidelines in place to protect borrowers.
  5. Personal Finance

    How Many Mortgage Lenders Should You Apply To? (FICO)

    Applying to multiple mortgage lenders can get you a better deal, but it comes with a few drawbacks.
  6. Insurance

    Life Insurance Clauses Determine Your Coverage

    Understanding these key parts of your policy will help you to ensure that your family will be covered.
  7. Taxes

    Tax Rules For Resident And Nonresident Aliens

    This article examines the definition and tax treatment of these types of non-U.S. citizens.
RELATED FAQS
  1. What is an alienation clause?

    Whether used in reference to insurance policies, mortgages or commercial loans, an alienation clause stipulates that should ... Read Answer >>
  2. What’s the difference between a mortgage lender and a mortgage servicer?

    Buying a home is an exciting and confusing process. Once the loan is secured, it's important to know who gets the payment: ... Read Answer >>
  3. I am a non-U.S. citizen living outside the U.S. and trading stocks through a U.S. ...

    The tax implications for a foreign investor will depend on whether that person is classified as a resident alien or a non-resident ... Read Answer >>
Trading Center