What is the provision in a mortgage that allows the responsibility of an existing mortgage to be passed to the buyer?

The provision that allows the responsibility of an existing mortgage to be passed to the buyer is known as the Assumption Clause. This clause effectively permits the new buyer to take over the existing mortgage and its payments under the current terms. It enables a smooth transfer of financial responsibility from the seller to the buyer, allowing the buyer to assume the existing loan without needing to obtain new financing.

This clause is important in transactions where sellers are looking to sell their property while still having a mortgage in place. By assuming the mortgage, the buyer can potentially benefit from the existing terms of the loan, which may be more favorable than current market rates, making the property more attractive.

On the other hand, the Alienation Clause typically refers to a restriction on the transfer of a property, often allowing the lender to demand full repayment if the property is sold. The Due-on-sale Clause, meanwhile, allows the lender to call the loan due upon sale, preventing assumption unless approved by the lender. The Subordination Clause is generally related to the hierarchy of liens but doesn’t specifically address the transfer of mortgage responsibility to a buyer.

Hence, the Assumption Clause is crucial for facilitating transactions by detailing how the responsibility of the mortgage can be effectively transferred to the buyer.