The Short Answer:
Changing how title is held to real property may cause the mortgage on the property to become due in full. Lenders usually include a “due on sale” clause in their loan agreements which allows them to demand full repayment of the loan when real property with a mortgage is transferred without their consent.
In order to prevent abuse of the due on sale clause, the Garn-St. Germain Act forbids lenders from asking for full repayment of the loan in certain situations. For example, if a client transfers her primary residence into her revocable living trust, the law prohibits the lender from calling the loan due. It is important to note, however, the Garn-St. Germain Act applies to loans secured by residential real property containing four units or less. If you are transferring commercial property or apartments with five units or more then the Garn-St. Germain Act may not apply.
In that case, the safer option would be to seek lender approval before the transfer of such real property into the revocable trust.
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