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.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.

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)

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References in periodicals archive ?
"Crisil understands that many of the investors in NCDs with acceleration clauses have not yet exercised their acceleration rights.
The loan will expire in 2024, creating refinancing risk, and also contains acceleration clauses. Fitch views these terms negatively as it places a significant amount of control with the bank as certain events of default can be cured or waived by the bank to prevent an acceleration of debt.
"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.
In many states, longstanding principles of res judicata, when taken with the state law's treatment of acceleration clauses, require courts to grant homeowners "free houses" when banks lose their foreclosure cases.
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.
1991) ("acceleration clauses 'serve a valid business purpose'").
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 assigned ratings also capture the refinancing risks that Acapulco faces stemming from the right of the lenders to trigger acceleration clauses. Acapulco's outstanding long term debt consists of two enhanced