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Acceleration of Rents

By John G. Kelly

An acceleration of rent provision gives the landlord the right, after a default by the tenant, to demand the entire balance of the unpaid rent owed under the lease for the entire remainder of the term to be paid in one lump sum. Under the law of most states, if there is no acceleration of rents provision, the landlord is typically entitled only to collect rent from the tenant as it becomes due under the lease each month for the remainder of the term. In many states, the landlord's remedy would be further subject to a duty to mitigate damages by making efforts to find a replacement tenant for the vacated premises.

Although requiring the landlord to collect rent each month from the defaulting (and former) tenant provides some degree of certainty, it is often impractical for a multitude of reasons, and the landlord would clearly prefer to collect the balance of the rent owed under the lease for the remainder of the term in one payment. Accordingly, most landlords include an acceleration clause in their form commercial lease. Whether or not such a provision is enforceable depends on the laws of the particular state and the facts of the case. This article highlights some recent court decisions on the topic, and offers some suggestions for reasonable middle ground positions that should survive scrutiny.

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