Also known as: debt acceleration clauses · acceleration clause
Written by attorneys · grounded in primary & secondary sources — see below
A contractual provision in a mortgage or note that empowers the mortgagee upon the mortgagor's default to declare the entire unpaid debt immediately due and payable. The clause is exercised through written notice delivered after default and specifying an effective date. Once effective the borrower must tender the full accelerated balance to prevent foreclosure absent statutory reinstatement waiver or lender misconduct.
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Delilah Duran missed three monthly payments on a mortgage held by Dominion Capital. Dominion sent a dated letter declaring the full unpaid balance immediately due. Delilah tendered only the arrears within the period mentioned for delayed enforcement. The court required payment of the entire accelerated amount before any reinstatement could occur.
Crestview Bowl missed tax payments under a lease containing a tax acceleration clause. The landlord attempted to recover the accelerated tax liability as additional rent years later. The tenant argued waiver through prior discussions and continued acceptance of base rent. The court examined whether the clause had been effectively invoked or waived by conduct.
Acceleration becomes effective on the date specified in a written notice from the mortgagee to the mortgagor delivered after default. The notice must clearly declare the full balance immediately due. Until that date the borrower may still cure by paying only the amount then owing.
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Once acceleration is effective the borrower generally must tender the full accelerated balance to prevent foreclosure. Payment of only the missed installments does not reinstate the loan absent a statute contractual reinstatement right or lender waiver.
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A notice that fails to specify a future effective date does not make acceleration effective. The borrower retains the right to cure by paying only the amount then owing until a proper notice with a designated date is delivered.
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A letter stating the loan will be accelerated if payments are not brought current does not make acceleration effective. The borrower may still cure by paying arrears until the lender issues a subsequent notice declaring the debt presently due.
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Acceleration must be exercised in good faith. Some jurisdictions also require notice together with a meaningful cure period before the clause may be enforced.
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