Accelerated Rent Lease Clauses

An acceleration of rent clause provides that upon specified events rent for the entire remainder of the lease terms becomes due immediately. The triggering event may be failure to pay rent or tenant insolvency. Some rent acceleration clauses are broadly worded to include any tenant default of the terms of the lease.

Some jurisdictions enforce acceleration clauses. In other jurisdictions the clauses are scrutinized under liquidated damages clauses and may be held to be an unenforceable penalty.[1]

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Recent D.C. Opinion on Lease and Option

In a recent opinion the Chancery Court of the District of Columbia considered what it characterized as an “unusual” and even “bizarre” question:

Does the contract law of the District of Columbia require the owner of a building to accept a lease that no reasonable lessor would ever sign simply to facilitate the lesseeā€™s exercise of a contractual option to purchase the building?

The option holder sought specific enforcement of an option contract.  The owner argued that to exercise the option the option holder had presented a lease that no reasonable lessor would ever sign.  The owner counterclaimed for an alleged lost opportunity to sell the property to a third person.

The court denied both parties requested relief.