What does the alienation clause refer to in a loan agreement?

The alienation clause in a loan agreement specifically refers to the ability or requirement for the borrower to transfer property ownership. This clause is designed to protect the lender in situations where the property is sold or transferred to another party without the lender's consent. If the borrower sells the property, the lender may have the right to call the loan due, meaning the full balance must be paid immediately. This ensures that the lender maintains control over the conditions under which their loan is secured and minimizes the risk of the loan being assigned to someone who may not meet the repayment criteria.

In contrast, the other options pertain to different aspects of the loan process. The loan payment schedule outlines how and when payments are to be made, the property appraisal process evaluates the market value of the property, and insurance requirements specify the need for adequate insurance coverage to protect the lender's interest. Each of these elements plays a role in a real estate transaction, but the alienation clause is specifically centered on ownership transfer, highlighting its distinct purpose in the lending context.