Dawn Investment Co. v. Superior Court

Opinion

BROUSSARD, J.

Wellenkamp v. Bank of America (1978) 21 Cal.3d 943 [148 Cal.Rptr. 379, 582 P.2d 970], held that lender enforcement of a due-on-sale clause, contained in a deed of trust or promissory note secured by real property, constitutes an unreasonable restraint on alienation unless the lender can demonstrate that enforcement is reasonably necessary to protect against the impairment of security or risk of default. In the instant case we conclude that the Wellenkamp rule applies to noninstitutional lenders and to commercial property.

In March 1977, petitioners 1 sold a 16-unit…