Unique situation due to divorce

UPDATED: Oct 1, 2022

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Unique situation due to divorce

I owned my primary residence with my ex-husband for 5 years before we divorced. I bought him out of the house, it was awarded to me in the divorce and I remained in it for a few months in 2019. I since moved out of the area and put the house on the market. The house has gotten almost no showings in 3 months and I’ve elected to rent the house out as I think the market is just not good for selling in my area right now. The deed is in my name but the mortgage is in both our names. I want to assume the loan at Wells Fargo, however they’ve told me that a due-on-sale clause would apply if I had tenants in the house. Is this simply because I have tenants in the house and not living in it myself? Is this typically enforced? Since I’m not legally required to refinance or assume the loan, it seems that it’s in my best interest to keep the loan as is, keep it current, and try to sell it again next year when my tenants lease ends. Obviously, my ex-husband would like the loan out of his name but it’s not negatively affecting him as I’ve never let the loan go unpaid.

Asked on July 15, 2019 under Real Estate Law, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Not seeing the specific clause you reference, we cannot discuss it in any definitive way: contracts (and mortgages or indeed, any loan agreements, are contracts) are enforced according to their plain or explicit terms. So if there is a provision or language stating that the due-on-sale clause applies to a rental situation then it applies; if the mortgage does not contain such language, however, then it would not. You have to look to the plain language of the mortgage itself.

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