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 ?
The CreditWatch reflects our view of an increasing risk of Mozambique on its debt, either as a result of higher-than-expected debt service obligations, or due to acceleration clauses in the government's external commercial debt.
2) In judicial-foreclosure states, if the homeowner defaults on at least one payment for a specified amount of time, (3) the bank has a choice: it can bring suit to recover just the missed payments, (4) or it can exercise the acceleration clauses (5) in the note and bring the entire remaining loan balance due.
Moody's notes that, while MTS does not have any cross default and cross acceleration clauses relating to Sistema, there is a change of control clause in MTS's Eurobond documentation, which gives bondholders the right to put the bonds if more than 50% of MTS's shares are transferred from Sistema to another controlling shareholder.
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.
Subjective acceleration clauses in debt instruments.
The concept of subjective acceleration clauses is first addressed in FASB Statement No.
The loan agreements contain acceleration clauses based on late payment or other events of default.
The assigned ratings also capture the refinancing risks that Acapulco faces stemming from the right of the lenders to trigger acceleration clauses.
This clause reflects a view that acceleration clauses are of dubious enforceability.
Although the maturity dates of these obligations extend beyond the end of Waterlink's fiscal year ending September 30, 2003, they have been classified as current liabilities on the balance sheet based on acceleration clauses that could be implemented by senior lenders.