What Is an Acceleration Clause?
An acceleration clause is a contract provision found in virtually every mortgage and promissory note that gives the lender the right to declare the entire remaining loan balance immediately due and payable if the borrower violates certain terms. Without an acceleration clause, the lender could only sue for each missed payment individually.
Common Acceleration Triggers
- Missed payments — The most common trigger. After a specified number of missed payments (typically 3), the lender can accelerate the loan.
- Failure to pay property taxes — If the borrower fails to pay property taxes and the loan does not include an escrow account.
- Failure to maintain insurance — Letting homeowner's insurance lapse violates most mortgage agreements.
- Unauthorized transfer (due-on-sale) — Transferring the property without the lender's consent triggers the due-on-sale clause, which is a form of acceleration clause.
- Bankruptcy filing — The borrower filing for bankruptcy may trigger acceleration.
- Property destruction — Failure to maintain or deliberate damage to the property.
Acceleration and Florida Foreclosure
In Florida foreclosure, the lender must send an acceleration letter (also called a notice of default or demand letter) before filing a foreclosure lawsuit. Under Paragraph 22 of the standard Fannie Mae/Freddie Mac mortgage, the lender must:
- Send written notice specifying the default
- Give the borrower at least 30 days to cure the default
- Inform the borrower that failure to cure will result in acceleration and foreclosure
If the borrower cures the default within the notice period, the loan is reinstated and the acceleration is withdrawn.
Related Terms
- Foreclosure — Follows acceleration if the default is not cured
- Mortgage — Contains the acceleration clause
- Promissory Note — The debt instrument that is accelerated
- Deed in Lieu — Alternative to foreclosure after acceleration
Barnes Walker Foreclosure Defense
Barnes Walker's litigation attorneys defend borrowers against improper acceleration and foreclosure and represent lenders in enforcement actions. Request a legal inquiry for assistance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC