Demand Clause Law and Legal Definition

Demand clause is a provision in a note that allows the lender to demand repayment of the balance in full for any reason. It allows the holder to compel full payment if the maker fails to meet an installment. A popular variation of the demand clause is the acceleration clause which allows the lender to exact full repayment of the loan any time any obligation on the agreement is violated. Demand clauses protect the mortgage lenders against rising rates of interest or demanding additional collateral under certain conditions such as bankruptcy, failure to pay taxes on mortgaged property.