My wife and I bought a condo conversion in san diego 2 1/2 years ago at a 4.25% fixed 30yr interest rate. When we had our first child 5 months ago, we realized we needed to move into something bigger, but that meant renting this place and moving to buffalo. There is a clause in our lender's contract that stipulates "owner occupancy for the entire life of the loan!" if we were to rent it out, how would they verify owner occupancy? More importantly, can they honestly keep us in this condo for the next 27 years without allowing us to rent it? It's hardly an investment property with the way the market is these days. We are unable to refinance because we have no equity as the market value went from $225,000 to $180,000.

If that clause was in the contract, then, if they find out (and the condo assoc might inform them) they could call the loan on you. No they can't force you to stay, you can always sell. But they can force you to live there while you own it.

Scott is right on! You may be in a loan that is sponsored by a bond program in CA that gives a low rate to 1st time buyers. The primary stip on those loans is that it has to be owner occupied. Because they are not meant to act as investment or income producing properties. Rest assured they will call the loan if they find out. You really need to sell it and move on.