§ 6.2-421 Certain contracts to permit prepayment; amount of prepayment penalty
1. “First deed of trust” or “first mortgage” includes all deeds of trust and mortgages, and amendments thereto, that are made by the same grantor or mortgagor, secure notes held by the same holder, convey substantially the same real estate, and are superior to all other deeds of trust or mortgages on the real estate; and
2. “Real estate” includes a leasehold estate of not less than 25 years.
B. Every loan contract, except as provided in subsection D, that is secured by a first deed of trust or first mortgage on real estate if the principal amount of the loan is less than $75,000, shall:
1. Permit the prepayment of the unpaid principal at any time; and
2. Not provide for a prepayment penalty in excess of one percent of the unpaid principal balance.
C. Any prepayment penalty provision in violation of subdivision B 2 shall be unenforceable as to the amount in excess of one percent of such balance.
1. Subsections B and C shall not apply to secured or unsecured notes evidencing installment sales contracts; and
2. Subdivision B 2 and subsection C shall not apply to any loan contract that is (i) subject to § 6.2-422 or 6.2-1409 or (ii) governmentally regulated as to prepayment privilege.
History
This law was first created in 1987. The record of its establishment is cataloged in chapter 622 of that year’s edition of “Acts of Assembly,” the annual state publication listing all changes made to the Code of Virginia in that year. Unfortunately, the 1987 “Acts” aren’t available online. It has been modified 1 time. Those modifications are cataloged by “The Acts of Assembly,” a state publication, by year and chapter. Those modifications that can be read on the General Assembly’s website will be linked accordingly. That modification is as follows: in 2010, chapter 794.
1987, c. 622, §§ 6.1-330.69, 6.1-330.81; 2010, c. 794.