See, e.g., In Re LHD Realty Corp., 726 F.2d 327, 330 (7th Cir. 1984); Eyde Bros. Dev. Co. v. Equitable Life Assurance Society, 697 F. Supp. 1431, 1436 (W.D.Mich. 1988); In Re A.J. Lane Co., 113 B.R. 821, 825-27 (Bankr. D. Mass. 1990); McCausland, 757 P.2d at 944-45; Renda, 4 Mass. App. Ct. at 786, 343 N.E.2d 159. It is well-settled, however, that there are some limitations upon the right of a lender to receive unearned interest or a prepayment premium on a fixed debt obligation.
Id. Similarly, in Eyde Brothers Development Co. v. Equitable Life Assurance Society, 697 F. Supp. 1431 (W.D.Mich. 1988), affirmed, 888 F.2d 127 (6th Cir. 1989), the mortgagee refused to consent to a transfer of the mortgaged property unless the interest rate was increased and the due-on-sale clause contained no language restricting the mortgagee's prerogative to grant or deny its consent to the proposed transfer. The court rejected the mortgagor's argument that the due-on-sale clause imposed an unreasonable restraint on alienation, noting that there is a general rule that "pays deference to the parties' freedom of contract, promising enforcement of a prepayment clause in accordance with the parties' agreement," and stating that there is a "clear legislative preference for upholding the parties' freedom of contract."
A prepayment premium will not be enforced under default circumstances in the absence of a clause which so states ( 3C Assoc. v. IC LP Realty Co., 137 AD2d 439 [1st Dept 1988]; George H. Nutman, Inc. v. Aetna Bus. Credit, 115 Misc 2d 168 [Sup Ct, Queens County 1982]; Matter of LHD Realty Corp., 726 F2d 327 [7th Cir 1984]). In the event that a court concludes that the borrower has defaulted intentionally in order to trigger acceleration and thereby avoid or evade a prepayment premium, the prepayment clause may be enforced, notwithstanding substantial authority which requires an explicit agreement to allow a premium after acceleration ( Eyde Bros. Dev. Co. v. Equitable Life Assur. Socy. of U.S., 697 F Supp 1431 [WD Mich 1988], affd 888 F2d 127 [6th Cir 1989]; Matter of LHD Realty Corp., 726 F2d 327, 331 [7th Cir 1984]; Rodgers v. Rainier Natl. Bank, 111 Wash 2d 232, 757 P2d 976).