due process

Legal proceedings carried out fairly and in accord with established rules and principles. Due process standards are sometimes referred to as either substantive or procedural. Substantive due process refers to a requirement that laws and regulations be related to a legitimate government interest (e.g., crime prevention) and not contain provisions that result in the unfair or arbitrary treatment of an individual. The 5th Amendment to the Constitution of the United States states that “no person shallelipsisbe deprived of life, liberty, or property, without due process of law.” This right was extended to the states by the 14th Amendment (1868). Fundamental to procedural due process are adequate notice before the government can deprive one of life, liberty, or property, and the opportunity to be heard and defend one's rights. The boundaries of due process are not fixed and are the subject of endless judicial interpretation and decision making. Seealso rights of the accused; double jeopardy.

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A due-on-sale clause is a clause in a loan or promissory note that stipulates that the full balance may be called due upon sale or transfer of ownership of the property used to secure the note. The lender has the right, but not the obligation, to call the note due in such a circumstance.

Virtually all recent mortgages made in the United States contain a due-on-sale clause. This is in contrast to the wide availablility of assumable mortgages that were available in the past.

In real estate investing, the due-on-sale clause can be a concern for a property owner who wishes to extend seller financing to a potential buyer by using a wraparound mortgage. This arrangement triggers the due-on-sale clause of the seller's underlying mortgage and thus the lender may call the loan. In this case, if the seller doesn't have enough cash on hand to pay the full balance of the note, the bank could foreclose on the property. There is debate in the investing community as to how likely a bank is to actually call the loan due in such a situation.