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Avoiding "Due on Transfer" in Trusts: Structuring Transfers to Avoid Triggering Acceleration Clauses

A Real World Guide to Garn-St. Germain Act Exemptions

Recording of a 90-minute CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, April 25, 2023

Recorded event now available

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This CLE course will provide estate planners and trust attorneys with comprehensive guidance on accomplishing transfers of encumbered real property to a revocable living trust without triggering "due-on-sale/due-on-transfer" mortgage provisions. The panelist will discuss how the Garn-St. Germain Depository Act exclusions operate in the real world of trust and estate planning practice. They will offer practical tools for structuring transfers and drafting trust language to avoid acceleration clauses in mortgage notes.


Almost every mortgage agreement on real property contains a "due-on-sale/due-on-transfer" clause, which gives the lender the option to demand payment in full of the loan under certain circumstances, such as when the title transfers to another party, without the advance written consent of the lender.

A notable exception to the enforceability of these provisions is in the Garn-St. Germain Depository Institutions Act which exempts transfers of certain residential real property from enforcement of the due-on-sale clauses. While the Act has been law for over 30 years, estate planners and attorneys face challenges in applying the exemption provisions.

The Act protects transfers of certain real property "into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property." However, transfers to other persons or entities often do not receive statutory protection from the due-on-transfer requirements, and in some scenarios, the treatment is not definite.

For example, would a transfer of the property into a single-member LLC where the borrower is the sole member give the lender the option to call the note immediately due and payable?

To protect a client's real property assets, estate planners and counsel must have a clear understanding of what property is eligible for the exemption, how to draft trust documents for a qualified trust, and how to structure transfers of the property into not only trusts but LLC structures.

Listen as William Bronchick, Principal Shareholder at Bronchick & Associates, provides a real world guide to structuring trusts to protect residential real property assets from acceleration clauses in mortgage documents.



  1. History of the due-on-sale clause and the Garn-St. Germain Depository Institutions Act
  2. A brief definition of due-on-sale/due-on-transfer provisions
  3. Exceptions that the Garn-St. Germain Depository Act provides to the due-on-transfer provisions
  4. Drafting revocable living trust documents to hold encumbered real estate
  5. Structuring the transaction to avoid the acceleration provision
  6. Transfers into single-member LLCs


The panelist will review these and other key issues:

  • What are the specified transfers exempt from enforcement of due-on-sale/acceleration clauses as they relate to estate planning?
  • What are the practical requirements of a trust to ensure that a transfer of qualified property does not trigger an acceleration clause?
  • What are the specific traps that trust counsel must avoid in structuring a trust transaction?
  • Sample language for trust documents


Bronchick, William
William Bronchick

Principal Shareholder
Bronchick & Associates

Mr. Bronchick specializes in all forms of asset protection and is a nationally-known attorney, author, and speaker. He...  |  Read More

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