Due-on-sale clauses are a common element of most mortgages and other loans. The provision is a protection for lenders specifying that if property rights of an encumbered asset are transferred, the lender has the right to demand immediate payment for any amounts due from the debtor. A transfer could be any change in the debtor’s rights to the property – like selling a home or quitclaiming a deed. Logically, upon the sale of a home, a lender would want to recover the balance of the loan owed by the debtor-seller. The original note may say that the debtor has 100 more months to pay, but with the due-on-sale clause, payment is due right away due to the transfer. Fortunately though, not all transfers are treated as “transfers” that trigger the clause.

When there is a dispute as to whether the due-on-sale clause has been activated, challengers look to two different authorities for guidance: the Garn-St. Germain Act and the Office of the Comptroller of the Currency (OCC). Debtors look to the former; lenders look to the latter. Frustratingly, the two provisions do not align entirely.

The Uniform Law Commission (ULC) has been around for more than a century.  The non-profit has commissioners from each state that promulgate uniform laws for states to ruminate and adopt. The goal of the UTC is to promote the uniformity of laws across the U.S.  A model act is one that doesn’t necessarily need to be adopted in its entirety; the purpose of the act can be achieved even if only parts of the act are adopted.  A uniform act is one that tries to establish the same directive on a particular topic across the various jurisdictions.  Even if the goal of a uniform act is adoption in its entirety, many states still add their own changes and nuances upon adoption. 

According to the National Council on Aging, 1 in 10 elders in the U.S. have experienced some form of abuse, yet only 1 in 14 is reported. It is a sad reality that there are elders in our communities that suffer from various forms of abuse. Financial, physical, and sexual abuse are common examples of the ways in which our older generation is exploited and endangered. Unfortunately, elder law attorneys are likely to encounter such a client at some point during the course of their careers.

Every lawyer is, or definitely should be, familiar with the Rules of Professional Conduct for the states in which they practice. A primary tenet of lawyering is the duty of an attorney to keep their client’s disclosures confidential. With that in mind, how does an attorney balance the need to keep client information confidential with a moral or legal requirement to disclose potential elder abuse?

Do the duties of confidentiality prevent disclosure?