acceleration clause

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Acceleration clause

A contract stating that the unpaid balance becomes due and payable if specific actions transpire, such as failure to make interests payments on time.

Acceleration Clause

A clause in a contract, especially a loan or bond, allowing a creditor to call the debt if certain, stated events occur. For example, if a borrower defaults on two or more payments, an acceleration clause may allow a lender to force the borrower to repay the entire amount of the loan immediately. Failure to repay could absolve the lender of all obligations in the contract, including the requirement to refund any money the borrower had previously paid, and render it effectively null and void.

acceleration clause

A provision in a bond indenture that in the event of default allows the trustee or the holders of 25% of the principal amount of the outstanding issue to declare all of the principal and interest immediately. Calling for an acceleration is likely to cause the borrower to cure the default or seek bankruptcy protection.

acceleration clause

The clause in a promissory note or lease that allows immediate demand,upon default,for all sums due over the entire term.

Acceleration Clause

A contractual provision that gives the lender the right to demand repayment of the entire loan balance in the event that the borrower violates one or more clauses in the note.

Such clauses may include sale of the property, failure to make timely payments, or provision of false information.

I have never seen a note that did not have such a clause. Borrowers need not concern themselves with it except where the lender has discretion to exercise it without conditions. This would be referred to as a “demand feature,” and it would be flagged on the Truth in Lending Disclosure Statement. If that statement shows “This loan has a Demand Feature…,” the note should be read with care. See Demand Clause.

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References in periodicals archive ?

2d at 869 ("Once Johnson triggered the acceleration clause of the note and the entire debt became due, the contract became indivisible.

In defense of "free houses"

Borrowings under a revolving credit agreement that contain a subjective acceleration clause and also require a borrower to maintain a lockbox with the lender (whereby lockbox receipts may be applied to reduce the amount outstanding under the revolving credit agreement) are considered short-term obligations.

Asset-based financing basics: what CPAs need to know about using asset-based lending and factoring as alternatives to traditional bank financing

78, a subjective acceleration clause is defined as "a provision in a debt agreement that states that the creditor may accelerate the scheduled maturities of the obligation under conditions that are not objectively determinable;" it then repeats the above phrases as examples.

Subjective acceleration and demand clauses in loan agreements

79-3 says if a long-term debt agreement does contain a subjective acceleration clause and acceleration of the due date is remote, neither reclassification to current liabilities nor disclosure of the acceleration clause is required.

Mortgage-backed securities

Cases suggest, however, that an acceleration clause would be enforced if it provided for an offset for the reasonably anticipated revenues from re-letting.

What damages can an owner collect when a tenant vacates prior to lease expiration?

The Consideration Warrants will include an acceleration clause which will provide that, in the event that the closing price of GoviEx's common shares on the Canadian Securities Exchange ("CSE") is equal to or greater than C$0.

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of an acceleration clause ensures that significant principal repayments

Moody's Affirms EIF'S Aaa Rating and Stable Outlook

A framework for voluntary prepayment is also introduced to complement the accelerated-repayment clause, by enabling and encouraging the prepayment of ADF loans that currently do not contain the acceleration clause.

Tunisia : Bank Group approves accelerated repayment and voluntary prepayment of ADF loans