Which clause gives the seller the right to declare entire purchase price due if the buyer defaults?

• A. Prepayment privilege
• B. Acceleration clause
• C. Warranty to title clause
• D. Recapture clause

Answer: (B)

An acceleration clause lets the lender demand the entire remaining balance of the loan if the buyer defaults. This clause is there to protect the lender by turning a installment loan into an immediate repayment obligation when a default happens. Once triggered, the buyer would owe the full purchase price (the outstanding principal plus accrued interest) right away, rather than continuing to pay in installments.

The other clauses don’t accomplish this. A prepayment privilege is about the borrower paying off the loan early under certain terms, not about accelerating repayment after a default. A warranty to title clause ensures the seller provides good title, not related to loan repayment. A recapture clause is used in different contexts and doesn’t specifically authorize accelerating the entire balance upon default.