Legal
Acceleration Clause
A provision in a mortgage contract that allows the lender to demand immediate payment of the entire remaining loan balance if certain conditions are violated, such as missing payments or selling the property without lender approval. The acceleration clause is what gives lenders the legal ability to begin foreclosure proceedings. Most mortgages include this clause, though it is rarely triggered unless you default.
Why It Matters
Acceleration Clause has real legal implications for your rights and obligations as a homeowner or borrower. Overlooking the legal details of a real estate transaction can lead to costly problems down the road.
If you have questions about acceleration clause, consider consulting a real estate attorney, especially if you are in a state that requires attorney involvement in real estate closings. A small investment in legal advice can prevent major headaches later.