⚡ What Is an Acceleration Clause in Real Estate?

An Acceleration Clause is a contract provision—typically found in mortgages or deeds of trust—that allows the lender to demand full repayment of the loan immediately if the borrower defaults. Instead of continuing with monthly payments, the entire remaining balance becomes due at once.

How an Acceleration Clause Works

Acceleration clauses are designed to protect lenders when borrowers fail to meet loan obligations. When triggered, the clause gives the lender the right to “accelerate” the debt—meaning the borrower must repay the full remaining loan balance immediately rather than continuing with scheduled payments.

Common triggers for acceleration include:

  • Missed mortgage payments (the most common trigger).
  • Failure to maintain homeowner’s insurance.
  • Failure to pay property taxes.
  • Unauthorized transfer of ownership (often covered under a due-on-sale clause).
  • Violations of loan terms such as neglecting property maintenance.

Once acceleration is invoked, the borrower must either pay the balance or face foreclosure if they are unable to cure the default.

Why an Acceleration Clause Matters

For Homeowners / Borrowers:

  • Missing payments could trigger full loan repayment.
  • Helps borrowers understand the seriousness of default.
  • Impacts foreclosure timelines.
  • May provide a path to cure the default before acceleration proceeds.

For Lenders:

  • Protects the lender’s financial interest in the property.
  • Allows faster foreclosure when necessary.
  • Encourages borrowers to stay current on payments and obligations.
  • Ensures compliance with insurance and tax requirements.

Example of an Acceleration Clause

Here’s how an acceleration clause may appear in a real estate loan agreement:

  • “If Borrower fails to make any monthly payment within 30 days, the Lender may declare the entire unpaid principal balance and accrued interest immediately due and payable.”
  • “Violation of insurance or tax obligations may result in acceleration of the debt.”
  • “Upon unauthorized transfer of ownership, the Lender reserves the right to accelerate repayment.”

This clause gives the lender the legal ability to demand the remaining loan amount immediately following a breach.

Why Acceleration Clauses Matter for FSBO Sellers

FSBO sellers may encounter acceleration clauses when selling a property with an existing mortgage. These clauses can affect closing timelines and the seller’s ability to transfer the property.

  • Ensures sellers understand loan payoff requirements before closing.
  • Important when handling due-on-sale clauses.
  • Helps avoid unexpected demands for immediate loan payoff.
  • Critical when selling through Flat Fee MLS platforms where owners manage their own sale.

Frequently Asked Questions

What triggers an acceleration clause?
Common triggers include missed payments, unpaid taxes, lapsed insurance, loan violations, or unauthorized property transfers.

Can a lender accelerate a loan immediately?
Yes—if the borrower violates loan terms. Some states require notice and a chance to cure the default.

Can a borrower stop acceleration?
Often yes, by curing the default (paying missed amounts, reinstating insurance, etc.). Lenders may reverse acceleration if cured promptly.

Is an acceleration clause the same as a due-on-sale clause?
Not exactly. A due-on-sale clause is triggered by ownership transfer, while an acceleration clause can be triggered by various forms of default.

Does acceleration always lead to foreclosure?
No. Foreclosure happens only if the borrower cannot cure the default or pay the accelerated amount.