What is the purpose of the 'power of sale' clause in a mortgage?

The 'power of sale' clause in a mortgage primarily serves to provide the lender with the authority to sell the property in the event that the borrower defaults on their mortgage payments. This clause allows the lender, typically a bank or financial institution, to initiate a foreclosure process without court intervention, expediting the recovery of the owed debt.

When a borrower fails to meet their payment obligations, the power of sale clause enables the lender to take action without having to go through a lengthy judicial process, which can save both time and money. The lender can then sell the property at a public auction or through a private sale to recoup its losses. This mechanism helps facilitate the real estate market's efficiency by allowing properties in default to be returned to the market more quickly.

The other options do not accurately describe the power of sale clause. While allowing early repayment without penalty pertains to borrower benefits, transferring a lease to another tenant falls under lease agreements, not mortgages. Preventing the sale of the property contradicts the essence of the power of sale, as the clause is specifically enacted to enable the property’s sale under default conditions.