                                 CODE OF VIRGINIA

CERTAIN CONTRACTS TO PERMIT PREPAYMENT; AMOUNT OF PREPAYMENT PENALTY (§
6.2-421)

A. For the purpose of this section:

   1. &#8220;First deed of trust&#8221; or &#8220;first mortgage&#8221; 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. &#8220;Real estate&#8221; 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.

D. The provisions of:

   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 &#xA7; 6.2-422 or 6.2-1409 or (ii) governmentally regulated
   as to prepayment privilege.

HISTORY: 1987, c. 622, §§ 6.1-330.69, 6.1-330.81; 2010, c. 794.