Also known as: acceleration clauses · accel clause
Written by attorneys · grounded in primary & secondary sources — see below
A contractual provision in a loan agreement or mortgage that permits the creditor to declare the entire unpaid balance immediately due upon the debtor's default such as failure to pay an installment or breach of a covenant. The clause becomes effective upon proper notice after default. Once exercised the full accelerated amount must be paid to cure and prevent foreclosure or other remedies.
Adam Anderson borrowed from Alliance Holdings to purchase commercial property and signed a mortgage containing an acceleration clause. After missing three monthly payments Alliance Holdings sent written notice declaring the entire unpaid balance immediately due. Anderson tendered only the arrears but the lender rejected the partial payment and initiated foreclosure proceedings seeking the full accelerated amount.
Andrew Avery executed a note and mortgage with Azure Solutions that included an acceleration clause. Avery missed an interest payment and the lender provided written notice accelerating the debt after the cure period expired. Avery later offered the missed amount plus interest but the lender refused and pursued foreclosure for the entire balance.
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Written notice of acceleration delivered after default makes the clause effective on the date specified in the notice. Once effective the borrower must pay the full accelerated balance rather than only arrears to prevent foreclosure.
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No. After valid acceleration the borrower must tender the full accelerated balance to reinstate the mortgage and stop foreclosure unless a statute contract term or waiver provides otherwise.
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Yes. Acceleration must be exercised in good faith and some jurisdictions require notice together with a meaningful cure period before the clause may be enforced.
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No. The clause may also be triggered by nonpayment defaults such as failure to pay taxes maintain insurance or perform other mortgage covenants even if security is not impaired.
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…executed a series of notes secured by a deed of trust on the land. Upon default on one of the notes, Bullington, acting upon an acceleration clause in the deed, caused all other notes to become due and called upon the trustees to sell the land. The sale was duly made in Virginia and the proceeds of the sale applied to the payment of…