Under what conditions can a lender invoke an acceleration clause?

A lender can invoke an acceleration clause when certain conditions occur that indicate a borrower's failure to meet the terms of the loan agreement. This clause allows the lender to demand immediate repayment of the entire loan balance, rather than waiting for the scheduled repayment dates.

The first condition, if a borrower misses a certain number of payments, is a common trigger for the acceleration clause. When payments are missed, it signifies a breach of the loan agreement, leading the lender to protect their investment by accelerating the debt.

In addition, if the buyer tears down the house, this action could be interpreted as a significant alteration to the property that may violate the terms of the loan or the lender's obligations. Such changes can impact the value and use of the collateral securing the loan, thus justifying the invocation of the acceleration clause.

The failure to pay property taxes is another serious issue. Property taxes are a lien on the property, and when a borrower neglects to pay them, it poses a risk to the lender’s security interest in the property. This failure can allow the lender to act under the acceleration clause as it jeopardizes the lender's investment.

Therefore, all these situations — missed payments, significant property alterations, and failure to pay taxes — provide legitimate grounds for the