Which clause requires the borrower to pay off the entire mortgage when the property is sold?

The due-on-sale clause is designed to protect the lender's interest by requiring that if the borrower sells the property, they must pay off the entire loan balance as part of the sale transaction. This clause ensures that the lender has the right to demand full repayment when ownership of the property changes hands. It allows the lender to maintain control over who is responsible for the mortgage, thereby reducing the risk that a buyer who is less creditworthy will assume the loan.

In contrast, the prepayment clause refers to the borrower's ability to pay off the loan early, potentially involving specific terms about prepayment penalties. The grace clause typically relates to allowing a borrower some leeway in making payments without penalty, while the escrow clause pertains to the management of funds by a third party, often for taxes or insurance, rather than addressing loan payoff responsibilities during property transfers.