If you sign a promissory note in Texas, you may be agreeing—without realizing it—that the entire balance can become due immediately if you default. This is called an acceleration clause, and it plays a major role in business loans, real estate transactions, private lending, and even family loans.
Understanding how acceleration clauses work under Texas law can help both borrowers and lenders protect themselves and avoid costly disputes.
This article explains what acceleration clauses are, when they are enforceable, and how Texas courts regulate their use.
What Is an Acceleration Clause?
An acceleration clause is a contract provision that allows a lender to declare the full remaining balance of a debt immediately due and payable after a default.
Instead of continuing monthly payments, the borrower suddenly owes everything.
Typical defaults that trigger acceleration include:
- Missing payments
- Failing to maintain insurance
- Violating loan covenants
- Transferring property without consent
- Bankruptcy filing
Acceleration clauses are commonly found in:
- Promissory notes
- Deeds of trust
- Business loan agreements
- Private mortgage agreements
- Seller-financed real estate contracts
Are Acceleration Clauses Legal in Texas?
Yes. Acceleration clauses are generally enforceable in Texas if properly exercised.
Texas courts have long recognized the right of lenders to accelerate debts when contract terms are violated.
However, lenders must follow strict legal procedures before acceleration becomes effective.
Texas Law on Accelerating Debt
Under Texas law, most installment debts require two separate notices before acceleration is valid:
- Notice of Intent to Accelerate
- Notice of Acceleration
This rule comes from Texas case law and contract enforcement principles.
In addition, Texas Civil Practice & Remedies Code § 16.035 governs limitations periods related to accelerated debts:
“A person must bring suit for the recovery of real property… not later than four years after the day the cause of action accrues.”
For real estate loans, acceleration often triggers the statute of limitations clock.
Step One: Notice of Intent to Accelerate
Before accelerating, the lender must usually give the borrower a chance to cure the default.
This is called a notice of intent to accelerate.
It typically must:
- Identify the default
- State the amount needed to cure
- Provide a deadline to fix the problem
- Warn that acceleration will follow if unpaid
Many deeds of trust require this notice by contract.
Failing to send it correctly can invalidate the entire acceleration.
Step Two: Notice of Acceleration
If the borrower does not cure the default, the lender may then send a notice of acceleration.
This notice:
- Declares the entire balance due
- Ends installment payments
- Starts foreclosure or collection rights
- Triggers limitations periods
Once acceleration occurs, the debt is no longer payable in monthly installments.
Do All Loans Require Two Notices?
Not always.
Some promissory notes waive the right to notice. Others allow immediate acceleration upon default.
However, Texas courts strictly construe these waivers. If the contract language is unclear, courts often require notice anyway.
Because of this, lenders usually provide notice even when waivers exist.
Acceleration and Foreclosure in Texas
In real estate cases, acceleration is a key step before foreclosure.
Texas Property Code § 51.002(d) requires notice of default and intent to accelerate before most non-judicial foreclosures:
“The mortgage servicer shall give the debtor notice of default and opportunity to cure…”
If acceleration is improper, foreclosure can be challenged in court.
Acceleration and the Statute of Limitations
Once a debt is accelerated, the statute of limitations begins running on the entire balance.
For most real estate liens, the deadline is four years under Texas Civil Practice & Remedies Code § 16.035.
If a lender waits too long after acceleration, the lien may become unenforceable.
This issue frequently arises in older mortgage and seller-financed property disputes.
Can Acceleration Be Reversed?
Yes. In some cases, lenders can “abandon” acceleration.
Abandonment may occur when:
- The lender accepts partial payments
- Sends reinstatement notices
- Modifies the loan
- Resumes installment billing
Texas courts may treat these actions as canceling prior acceleration.
This can reset the limitations period.
Common Legal Problems Involving Acceleration Clauses
Acceleration disputes often arise when:
- Notices were never sent
- Notices were sent to wrong addresses
- Deadlines were unclear
- Payments were misapplied
- Partial payments were accepted
- Multiple accelerations occurred
These cases appear frequently in foreclosure defense, debt collection, and commercial litigation.
For Borrowers: What to Watch For
If you receive an acceleration notice, you should:
- Review your loan documents immediately
- Check whether proper notice was given
- Verify payment history
- Track limitation deadlines
- Seek legal advice quickly
Ignoring acceleration can lead to foreclosure, lawsuits, and judgments.
For Lenders: How to Protect Your Rights
If you are enforcing a loan, you should:
- Follow contract notice provisions exactly
- Keep proof of mailing and delivery
- Allow proper cure periods
- Document payment history
- Monitor limitations deadlines
Mistakes in acceleration procedure can destroy an otherwise valid claim.
When Should You Speak With a Texas Attorney?
You should consider legal advice if:
- You are facing foreclosure
- A lender accelerated your loan
- You are trying to collect on a promissory note
- A debt is several years old
- You believe notices were defective
Acceleration issues are highly technical and fact-specific.
Final Thoughts
Acceleration clauses are powerful legal tools in Texas. When properly used, they allow lenders to protect their investments. When misused, they can invalidate foreclosures and collection efforts.
Whether you are borrowing money, lending funds, or enforcing a contract, understanding acceleration law can save you significant time and expense.
If you have questions about promissory notes, real estate loans, or debt enforcement, consulting with an experienced Texas attorney is often the best first step.
At David C. Barsalou, Attorney at Law, PLLC, we help clients navigate business, family, tax, estate planning, and real estate matters ranging from document drafting to litigation with clarity and confidence. If you’d like guidance on your situation, schedule a consultation today. Call us at (713) 397-4678, email barsalou.law@gmail.com, or reach us through our Contact Page. We’re here to help you take the next step.
