Bill > HB1664

This bill adds a new section to Indiana law that restricts when lenders can invoke a due-on-sale clause, which is a provision in a mortgage allowing the lender to demand full repayment of the loan if the property is transferred. Specifically, the bill prohibits lenders from exercising this clause in two scenarios: first, when property is transferred through legal processes like inheritance (devise or descent) or upon the death of a joint tenant or tenant by the entirety, and second, when the property is transferred to a relative following the death of the original borrower. The bill defines a "lender" as any person or government agency that provides a real property loan and references the federal definition of a due-on-sale clause from U.S. Code. This legislation aims to protect family members from being forced to immediately repay a mortgage after the death of a property owner, providing more stability and continuity for inheriting family members. The new law is set to take effect on July 1, 2025.

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https://iga.in.gov/legislative/2025/bills/house/1664/details