Due on Encumbrance clause is a provision in a note or deed of trust providing that the secured lender may accelerate the maturity of the loan (declare all sums to be due and payable immediately) if the borrower places other mortgages on the real property or incurs additional liens on it without lender’s consent.

The reasoning is that if you reduce you equity in the property by taking out additional financing, the first lender may be placed in a less secure position.

This clause is often combined with a due-on-sale-clause.