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]

Accelerated rent upon tenant insolvency may be an unenforceable preference.[2] A bankruptcy trustee is not bound by an acceleration clause if the trustee assumes the lease and cures the lessee’s default and provides adequate assurance of future performance.[3]

The enforceability may also hinge on whether the landlord has resumed possession. In some jurisdictions the landlord must choose remedies and cannot obtain both possession and acceleration of rent. If the landlord obtains a judgment for accelerated rent the tenant may be entitled to continue in possession.[4]

In many jurisdictions the law regarding acceleration of rent is unsettled.

This short summary is not a substitute for legal advice. It may be prudent to get legal advice before entering into a lease, particularly a long-term commercial lease, or before seeking to enforce a lease provision. The law of leasing and landlord-tenant law are very different in different jurisdictions. You should seek consultation with a landlord-tenant attorney in the jurisdiction in which the rental property is located.

Further Reading

American Law of Landlord and Tenant, Robert S. Schoshinski, §5.40.

Friedman on Leases, Fifth Edition, Vol.1, Milton R. Friedman, Patrick A. Randolph, Jr., §5.3.

[1] Ricker v. Rombough 120 Cal. App.2d Supp. 912, 261 P.2d 328 (1953); 884 West End Ave. Corp. v. Pearlman 201 App.Div. 12, 193 NYS 670 (1922); Gentry v. Recreation, Inc. 192 SC 429, 7 SE2d 63 (1939); Patton v. Milwaukee Commercial Bank 222 Wis. 167, 268 NW 124 (1936); Justine Realty Co. v. American Nat. Can Co., 745 F.Supp. 1493 (E.D. Mo. 1990), judgment re’d. 976 F.2d 385 (8th Cir.1992); Nobles v. Jiffy Market Food Store Corp., 260 Ga. App. 18, 579 S.E.2d 63 (2003); Peterson v. P.C..Towers, L.P., 206 Ga. App. 591, 426 S.E.2d 243 (1992).

[2] Kothe v. R.C. Taylor Trust, 280 U.S. 224 (1930); In Re Barnett, 12 F.2d 73 (9126).

[3] 11 U.S.C. §§ 365, 1124.

[4] Maddox v. Hobbie, 228 Ala. 80, 152 So. 222 (1934); Geiger Mut. Agency, Inc. v. Wright, 233 So. 2d 444, 447 (Fla. Dist. Ct App. 1970); Caplan v. Latter & Blum, Inc., 462 So. 2d 229 (La.Ct. App. 1984); Pirkle & Williams v. Shreveport Jitney Jungle, Inc., 19 La.App. 729, 140 So. 837 (1932); Benderson v. Poss, 142 A.D.2d 937, 530 N.Y.S.2d 362 (4th Dep’t); Homart Dev. Co. v. Sgrenci, 443 Pa. Super. 538, 662 A.2d 1092 (1995); Greco v. Woodlawn Furniture Co., 99 Pa. Super. 290 (1930); Quintero-Chadid Corp. v. Gersten, 582 So.2d 685 (Fla. Dist. Ct. App. 1991); Succession of Israel, 154 So. 487 (La. Ct. App. 1934).

Posted in Lease Interpretation.


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