Joe DownsCEO & Co-Founder, Belrose Storage Group. Founder, Storage Moguls.

Risk of Seller Financing

20 Feb 2026 · 0 min

Watch on YouTube

0:27

In this segment of the YouTube video “Risk of Seller Financing,” the speaker outlines two primary dangers when using seller financing for commercial properties. The first danger is the due‑on‑sale clause, which is present in most commercial mortgages and can cause the lender to demand immediate repayment if the title is transferred to a new buyer. The speaker explains that this risk can be mitigated by employing a wraparound mortgage, but only if the buyer can either pay off the existing loan or the remaining balance is small relative to the buyer’s down‑payment. The discussion emphasizes the importance of evaluating the outstanding loan balance and ensuring sufficient funds are available to avoid triggering the clause.

So you need to be aware of 2 major dangers. The first is the due-on-sale clause, which is in almost every commercial mortgage. So if they have an existing mortgage, sometimes this doesn't work because transferring the title to you can trigger the bank to call the entire loan due. And in this case, we'd be using like a wraparound mortgage or something. If you can't pay off the loan instantly, meaning, you know, if they have $100 grand left and you're putting $300 grand down, it's probably not a problem.