Also known as:acceleration rules · acceleration clause
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
1
in mortgage law
A contractual right allowing a mortgagee to declare the full unpaid balance of a secured loan immediately due upon the mortgagor's default. The right arises only when the mortgage or note contains an acceleration clause and is exercised according to its terms, including any required notice and cure period. Exercise must occur in good faith.
Sense 1
1
in mortgage law
A contractual right allowing a mortgagee to declare the full unpaid balance of a secured loan immediately due upon the mortgagor's default. The right arises only when the mortgage or note contains an acceleration clause and is exercised according to its terms, including any required notice and cure period. Exercise must occur in good faith.
Sources & Authorities· 1 primary source
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Common Law
Sense 2
2
in consolidated tax returns
A rule requiring a selling member of a consolidated group to recognize previously deferred intercompany gain or loss immediately before it becomes impossible to treat the buyer and seller as divisions of a single corporation. The rule applies when a member leaves the group while the property remains within the former group.
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2
in consolidated tax returns
A rule requiring a selling member of a consolidated group to recognize previously deferred intercompany gain or loss immediately before it becomes impossible to treat the buyer and seller as divisions of a single corporation. The rule applies when a member leaves the group while the property remains within the former group.
Each sense below has its own examples, sources, and questions.
Examples2
Missed Installment Without Notice
Apex Motors borrowed from Highline Finance and secured the loan with a mortgage on its showroom. The note required written notice of default and a fifteen-day cure period before acceleration. After Apex missed one payment and tendered the arrears plus fees eight days later, Highline rejected the tender and declared the full balance due. Because Highline had not yet sent the required notice, the attempted acceleration was ineffective and foreclosure for the entire debt could not proceed.
Lease Acceleration in Land Sale Contract
Atlas Ventures agreed to sell a warehouse to Aurora Biotech under a contract that included a rent acceleration clause for the existing tenant's lease. When the tenant missed payments, Aurora sought to enforce the clause to recover the full remaining rent. The clause operated as part of the land-transfer agreement, so its validity and effect were governed by the law of the state where the property was located rather than by general contract rules.
Frequently Asked3
Does a missed installment automatically accelerate the full mortgage debt?+
No. Acceleration is a contractual remedy that requires compliance with the terms of the note or mortgage, including any notice and cure provisions. A lender must take affirmative steps consistent with those terms and in good faith before the full balance becomes due.
Supporting sources
What happens if a lender accelerates before the contractual cure period expires?+
The acceleration is premature and ineffective. The borrower may still cure by tendering only the arrears, and the lender cannot foreclose for the full accelerated balance until the cure period has run.
Supporting sources
Can a lender accelerate after repeatedly accepting late payments without objection?+
Not in good faith. A consistent course of dealing that tolerates late payments creates a reasonable expectation that minor delays will not trigger acceleration, so abrupt acceleration after the same conduct violates the duty of good faith.
Supporting sources
Frequently Asked1
When does the tax acceleration rule force recognition of deferred intercompany gain?+
Recognition is required immediately before it becomes impossible to treat the buyer and seller as divisions of a single corporation, such as when one member leaves the consolidated group while the property stays behind.
Supporting sources
Real PropertyMortgages and foreclosure · ForeclosureNEXTGENFoundational