Which clause allows a lender to foreclose before the closing date?

The acceleration clause is a provision in a mortgage or loan agreement that allows the lender to demand the full repayment of the loan amount if certain conditions are met, such as a default by the borrower. This means that instead of waiting for the normal schedule of payments, the lender can call the entire balance due, which includes the right to initiate foreclosure proceedings against the property if the borrower fails to remedy the default.

This clause plays a critical role in protecting the lender's interests by providing them a mechanism to recover their investment in the event that the borrower defaults on the loan obligations before the closing date. By allowing the lender to foreclose based on this clause, it ensures that they can act quickly to minimize potential losses.

In contrast, the defeasance clause typically allows a borrower to substitute collateral for the loan rather than initiating foreclosure. The subordination clause is related to the prioritization of liens and does not directly enable early foreclosure. Lastly, the due on sale clause permits the lender to require full payment of the loan if the property is sold, but it is not directly related to early foreclosure based on default.