Acceleration Clause

An acceleration clause is a provision clearly stated in a contract (mortgage) that grants a lender (mortgager) the right to immediately recall a loan or demand full repayment of the outstanding loan balance amount owed.

It can be triggered upon an act that the lender deems as a breach of contract, like a default.

Almost all leases and promissory notes contain acceleration clauses.

For example when a property is sold by the owner (mortgagee), defaults on installment repayments, fraudulent documentation, false credit declarations, property value depreciates to less than amount owing, etc

Such clauses are most prevalent in mortgages and other types of financing arrangements with regards to real estate transactions.

While this is not an implied term in a typical mortgage, lenders are known to expressly state it to prevent abuse should the condition be absent.

Unlike a demand clause, lenders do not have the sole discretion to exercise an acceleration clause without certain conditions being met.