Acceleration Clause

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Acceleration Clause

The provision in a credit agreement, such as a mortgage, note, bond, or deed of trust, that allows the lender to require immediate payment of all money due if certain conditions occur before the time that payment would otherwise be due.

The agreement may call for acceleration whenever there is a default of any important obligation, such as nonpayment of principal or interest, or the failure to pay insurance premiums.

acceleration clause

n. a provision in a contract or promissory note that if some event (like not making payments on time) occurs then the entire amount is due or other requirements are due now, pronto. This clause is most often found in promissory notes with installment payments for purchase of real property and requires that if the property is sold then the entire amount of the note is due immediately (the so-called "due on sale clause.") Some states prohibit "due on sale" and always allow the new property owner to assume the debt. (See: acceleration, assumption)

References in periodicals archive ?
On February 26, 2015, the Company delayed the release of its fourth quarter and year-end operating results, citing its need for more time to evaluate the classification of its revolving credit facilities as current liabilities or long-term obligations under ASC 470-10-45, "Classification of Revolving Credit Agreements Subject to Lock-Box Arrangements and Subjective Acceleration Clauses," notwithstanding that the facilities do not contractually mature within the next twelve months.
8 billion and adopting contractual documentation for its refinancing that does not contain capital repayment step-up nor rating-related acceleration clauses
While acceleration clauses provide owners with a leg-up in any lease break negotiation, the advantage is particularly powerful when an owner does not want the tenant to break because the owner can leverage the tenant's liability to its advantage and demand a cash payment for the tenant's departure.
Specific areas requiring close attention in the due diligence process were the asset/liability measurement tests, income acceleration, hedge identification, tax indemnities and gross ups, acceleration clauses, and rating triggers.
79-3 are inconsistent in their treatment of subjective acceleration clauses in debt agreements.
The loan agreements contain acceleration clauses based on late payment or other events of default.
The states allege that the E-Z pay program deceived consumers by failing to disclose key terms of the loan including the actual percentage rate, total finance charges on the loan and acceleration clauses.