South Carolina Real Estate Practice Exam

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Question: 1 / 20

If a mortgage defaults, what clause allows the lender to demand payment?

Liquidation clause

Accelerated clause

The accelerated clause is crucial in the context of mortgage agreements because it grants the lender the right to demand immediate payment of the entire loan balance if the borrower defaults on the mortgage. This type of clause is designed to protect the lender’s interests by allowing them to expedite the repayment process rather than waiting for the borrower to catch up on missed payments.

In practical terms, if a borrower misses a certain number of payments or otherwise breaches the terms of the loan agreement, the lender can invoke the accelerated clause and initiate collection actions or foreclosure procedures more quickly. This clause essentially accelerates the loan due date, reflecting the lender's urgency to mitigate potential losses incurred due to default.

Other choices, while related to loan terms, do not specifically give the lender the right to demand immediate payment in the event of default.

Default clause

Closeout clause

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