Acceleration Clauses in Promissory Notes and Mortgages

By: David W. Wulfers

A friend approaches you and asks to borrow some money from you, stating he/she needs it to help purchase a home for the first time.  You say, “Sure, I will get online and get some legal forms to make it official.”  When surfing online, you come across a form of a promissory note or mortgage which includes the following clause:

Acceleration on Default

If any installment of this note [or mortgage] be not paid when due, then all installments hereof remaining unpaid shall immediately become due and payable at the option of the legal holder hereof, without notice or demand, said notice and demand being hereby expressly waived.^[1]

You continue looking for forms and come across another form of promissory note or mortgage which includes the following clause:

Acceleration on Default

If any installment of this note [or mortgage] be not paid when due, then all installments hereof remaining unpaid shall immediately become due and payable, without notice or demand, said notice and demand being hereby expressly waived.

You notice the second acceleration clause does not include the phrase that it will be triggered on a failure to pay “at the option of the legal holder hereof, . . . .”  Does it make a difference which form you choose?  No, not in Oklahoma.

Under Oklahoma law the second clause, just like the first clause, remains optional at the election of the holder or mortgagee.  If that holder or mortgagee decides not to declare a default after the debtor misses a payment, the debtor cannot later claim that the statute of limitations began to run on the debt when the debtor missed that payment.^[2]  In addition, the debtor cannot later contend that by waiving the right to claim a default on one missed payment, the holder or mortgagee waived its right to declare a default on any future missed payments.

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