Tucker v. Lassen Savings & Loan Ass'n

Opinion

SULLIVAN, J.

We deal here with a so-called “due-on” clause commonly used in security transactions in real property to provide, at the option of the lender, for the acceleration of the maturity of the loan upon the sale, alienation, or further encumbering of the real property security. In La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864 [97 Cal.Rptr. 849, 489 P.2d 1113] we concluded that while the lender may insist on the automatic enforcement of such a clause upon the occurrence of ah outright sale by the trustor-obligor, he may not exercise such an absolute power upon the…