When a loan becomes repayable ahead of schedule

Under point 18 of the Supreme Court of Cassation’s Interpretative Decision in case No. 4/2013, which also applies to non-bank financial institutions that lend in the course of business, acceleration changes the loan agreement. Unlike the general rule in Article 20a(2) of the Obligations and Contracts Act, the change results from a declaration by one party alone. Two conditions must be met: there must have been non-payment, and the lender must have exercised its right to declare the loan immediately due. A declaration of acceleration under Article 60(2) of the Credit Institutions Act requires the lender to state that it considers the entire loan or its outstanding balance immediately payable, including instalments whose due dates had not arrived when the declaration was made. Acceleration takes effect when the debtor receives the declaration, provided the objective conditions for acceleration already exist at that time. Consequently, an agreed acceleration clause and a breach of the loan agreement are not sufficient on their own: the debtor must also be validly notified of the lender’s declaration.

This article does not provide a legal opinion or advice about any particular person or situation. For assistance with an individual case, consult a lawyer practising in banking law.