Everyone is happy right?
Well, maybe not.

When I bought the property and got the loan from the bank I signed some documents that said that if I ever transferred the property the bank could call the loan all due and payable essentially immediately. Under a normal sale that's not a problem because a buyer would normally obtain a new loan to purchase my house and I would pay off my old loan during escrow. This time however my loan wasn't paid off but I transferred or sold the property. The lender may not be too happy about that.

Most real estate gurus will tell you that the bank doesn't really care what happens with the property as long as the payments are made on time. How would the bank ever know that you sold the property anyway - unless someone tells them and who's going to do that? Why would the bank take the time just out of the blue to search the public records for any transfer of ownership on your property when the payments are being made in full and on time?

Well, what if the existing loan is at 5% and mortgage rates have since gone up to 7 or 8%? Wouldn't the bank be interested in getting rid of those low rate mortgages and replacing them with higher rate loans? It might be in their best interests to search records on all their existing loans to see if there were any reason they could trigger the Due On Sale Clause and call the loan. This would force the loan to be either refinanced at the higher rate or paid off. If it was paid off the bank would have that money to lend out again at the higher rate.

Sound far fetched? Okay, what if the original sellers in a subject to deal sold because they were getting a divorce. Later one of the spouses feels like they got a raw deal so they go to the bank and inform them about the sale. The bank then calls the loan all due and payable within 30 days.

There are many scenarios in which subject to transactions can fall apart resulting in the triggering of the DOSC. Does this mean that subject to techniques should not be used? Not, necessarily. If you always have a way of refinancing or cashing out a property if the DOSC is triggered then in most cases it would be safe.