PSI Oklahoma Real Estate Practice Test

What clause allows a seller to reclaim property after a buyer fails to make a payment?

1. Acceleration clause

2. Prepayment clause

3. Due on sale clause

4. Escalation clause

The correct answer is: Acceleration clause

The clause that allows a seller to reclaim property after a buyer fails to make a payment is known as the acceleration clause. This clause is essential in real estate contracts and financing agreements, as it provides the lender (or seller, in this case) with the right to demand the total outstanding balance of a loan or obligation immediately if specified conditions are not met, such as missed payments. When the acceleration clause is triggered due to the buyer's failure to make payments, it enables the seller to take quick action, which may include foreclosure or other means to recover the property. This clause serves as a safeguard for sellers, ensuring that they have a legal recourse to reclaim their property under circumstances of default. The other options, such as the prepayment clause and due on sale clause, serve different functions. The prepayment clause pertains to terms under which a borrower may repay a loan early, often involving potential penalties. The due on sale clause allows a lender to demand full repayment of a loan when property ownership is transferred, which is unrelated to the buyer's payment performance. The escalation clause is not relevant here, as it typically pertains to bidding situations where prices may increase under certain conditions. Overall, the acceleration clause plays a critical role in protecting the financial interests