Which clause allows a lender to demand full repayment of a loan if a borrower defaults?

The acceleration clause is a vital component of loan agreements, particularly in real estate financing. This clause provides the lender with the right to demand the entire outstanding balance of the loan if the borrower defaults on any of the terms agreed upon in the mortgage or loan contract. Essentially, if a borrower fails to make scheduled payments, breaches any other significant terms of the loan, or experiences certain specified adverse events, the lender can invoke this clause. This mechanism protects the lender by allowing them to act swiftly in the event of a default, ensuring that they can recover their investment in a timely manner.

In contrast, other clauses such as the waiver clause typically pertains to the relinquishment of certain rights, while the prepayment clause deals with the conditions under which a borrower can pay off the loan early, which may include penalties or restrictions. The due-on-sale clause allows lenders to require full repayment if the property is sold, focusing on ownership transfer rather than borrower performance under the loan terms. Therefore, the acceleration clause unequivocally serves the purpose of enforcing repayment upon default, making it the correct choice in this scenario.