Is there any way to do a house trade if you still owe money on the property?

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Is there any way to do a house trade if you still owe money on the property?

Do the mortgages on both properties have to be paid off before a swap can occur? Or can a land sales contract be written that would take into account mortgages still owed on properties being traded?

Asked on July 12, 2011 under Real Estate Law, New York

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Trading properties between parties where there are existing mortgages on them is a complicated and tricky process to do primarily due to the terms of most mortgages securing the loan for the property these days.

Most mortgages have a term called "due on sale clause" on them which allows at the option of the person holding the mortgage to call the loan as being due of legal title is transferred from one party to another without the express written permission of the lending company.

Potentially a land sales contract can be written to take into account the mortgage amounts owed on the desired properties to be traded to equalize the net value of each each property after carefully reviewing the language of each mortgage on the properties to make sure that the loan will not be called as due and payable if there is a transfer.


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