Faced with an issue of first impression in Nebraska and a confusing body of law from other states, the Nebraska Supreme Court recently stopped just short of giving carte blanche approval to the enforceability of a due-on-sale clause in a real estate mortgage. With Occidental Savings and Loan Association v. Venco Partnership, Nebraska joined a growing majority of states which enforces mortgage clauses that accelerate the maturity of a note upon the transfer of the mortgaged property. Although the due-on-sale clause is of relatively recent origin, it already has become a major economic tool enabling savings and loan associations to balance their loan portfolios. Its use as an economic weapon cannot be overstated, as market analysts insist that use of the due-on-sale could mean the difference between continued loan availability and the eventual loss of long-term mortgages altogether. Analysis of the due-on-sale clause sheds light on its place in the real estate world and highlights the age-old conflict between property and contract rights. This note addresses the Nebraska due-on-sale opinion, studies its possible ramifications, and draws comparisons to the law in other jurisdictions. It is important to note that a simple listing of jurisdictions, classifying their stance on due-on-sale enforceability is an oversimplification at best. The issues are complex and thus require careful examination.
Lisa Marie Broman,
The Due-on-Sale Clause: Enforcement Standards: Occidental Savings and Loan Association v. Venco Partnership, 206 Neb. 469, 293 N.W.2d 843 (1980),
60 Neb. L. Rev.
Available at: http://digitalcommons.unl.edu/nlr/vol60/iss3/6