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Acceleration Clause |
Also found in: Financial, Wikipedia | 0.01 sec. |
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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) How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| ? Mentioned in | ? References in periodicals archive | |
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First, when selling an apartment, try to build in an extended close
date--maybe even try to ask the purchaser of the apartment if there can
be an acceleration clause for the close date if the sponsor is ready to
close sooner rather than later. 79-3 says if a long-term debt agreement does contain a
subjective acceleration clause and acceleration of the due date is
remote, neither reclassification to current liabilities nor disclosure
of the acceleration clause is required. Cases suggest, however, that an acceleration clause would be enforced
if it provided for an offset for the reasonably anticipated revenues
from re-letting. |
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