Explanations

The phrase “all due and payable upon the happening of a certain event” precisely describes an acceleration clause.

• An acceleration clause is a provision in a real estate financing instrument that grants the lender the right to demand the full outstanding debt immediately if the borrower violates any of the loan agreement’s provisions. This action is also referred to as “accelerating the loan,” “calling the loan,” or a “call provision”. For example, failure to pay property taxes or insurance, which could threaten the lender’s collateral, might trigger this clause. An alienation clause (due-on-sale clause) is a specific type of acceleration clause that allows the lender to call the loan due if the property’s title is transferred to a new buyer without the lender’s permission.

The other options do not fit this description:

• An exculpatory clause typically relieves a party from liability for certain issues.
• An escalator clause (or escalation clause) allows for an increase in payments, such as rent or interest rates, often tied to an index, but does not make the entire loan due.
• A release clause is found in a blanket mortgage and permits the borrower to release a specific parcel of land from the mortgage after repaying a certain portion of the debt.

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