6.2-421 - (Effective October 1, 2010) Certain contracts to permit prepayment; amount of prepayment penalty.
§ 6.2-421. (Effective October 1, 2010) Certain contracts to permitprepayment; amount of prepayment penalty.
A. For the purpose of this section:
1. "First deed of trust" or "first mortgage" includes all deeds of trustand mortgages, and amendments thereto, that are made by the same grantor ormortgagor, secure notes held by the same holder, convey substantially thesame real estate, and are superior to all other deeds of trust or mortgageson 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 securedby a first deed of trust or first mortgage on real estate if the principalamount 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 theunpaid principal balance.
C. Any prepayment penalty provision in violation of subdivision B 2 shall beunenforceable 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 notesevidencing installment sales contracts; and
2. Subdivision B 2 and subsection C shall not apply to any loan contract thatis (i) subject to § 6.2-422 or 6.2-1409 or (ii) governmentally regulated asto prepayment privilege.
(1987, c. 622, §§ 6.1-330.69, 6.1-330.81; 2010, c. 794.)