In real estate, what does the term 'alienation clause' refer to?

The term 'alienation clause' refers to a provision in a mortgage or loan agreement that prohibits the borrower from transferring ownership of the property without the lender's consent. Essentially, this clause is designed to protect the lender's interests by ensuring that the loan remains tied to the original borrower. If the property is sold or otherwise transferred, the lender has the right to demand full repayment of the loan balance.

In practice, an alienation clause can enable lenders to control who can assume the mortgage if the property changes hands. This means that if a borrower wishes to sell the property, they may need to either pay off the mortgage in full or seek the lender's approval for the buyer to take over the existing mortgage. By prohibiting loan assumption, the alienation clause effectively helps to mitigate the risk for the lender, as they may be more comfortable extending credit to specific borrowers based on the original terms agreed upon.

The other options refer to different aspects of real estate financing, but they do not encapsulate the specific function and purpose of the alienation clause in the context of mortgage agreements.