Acceleration Clauses in Commercial Leases

In a commercial lease, a Landlord may demand an acceleration clause. An acceleration clause allows a Landlord to demand the full amount of rent and other payments owed under the lease when a Tenant defaults on a lease. For example, if a tenant breaches the lease at the end of the second year of a 10-year lease the Landlord could demand rent for the remaining 8 years. In the example if the rent is $5,000.00 per month, the the Landlord could demand payment in the amount of $480,000.00 immediately.

In our experience, a judge will be reluctant to grant a demand under an acceleration clause in the state of Georgia. Although, you want to make sure that you are aware of this provision. Most Landlords will not remove an acceleration clause in a commercial lease. You should negotiate leases with short terms with many options to renew or extend the lease. Entering into a 5-year lease with an option to renew for another 5 years is much safer than entering into a 10-year lease.

If you need help drafting, negotiating, or reviewing a commercial lease please call us at 770-881-8081.