Foreclosure and the "Due on Sale" Clause


Real Estate Maven
REIN Member
Interesting "due on sale" case law for my Alberta Agreement for Sale colleagues:

In Royal Bank of Canada v. Freeborn, it was decided "due on sale clauses are contrary to the principle expressed in what is now section 150 of the Land Titles Act." It was the judge's opinion the section permits the transfer of interest in land through agreements for sale without requiring the consent of the lender. The Court therefore granted a stay of the foreclosure action.

The Court considers the following factors when deciding whether to grant a stay:
1) Is there no evidence the purchaser will cause the premises to fall in disrepair?
2) Does the lender have ample security in the land?
3) Are the terms of the mortgage unconscionable?
4) Will the lender suffer hardship if the stay is granted?
5) Will the purchaser likely default with respect to future payments?

(from "Mortgage Remedies in Alberta" by the Alberta Law Reform Institute)