Virginia § 6.2-421 Certain contracts to permit prepayment; amount of prepayment penalty

Virginia Statutes

§ 6.2-421 — Certain contracts to permit prepayment; amount of prepayment penalty

Virginia § 6.2-421

JurisdictionVirginia

Title 6.2FINANCIAL INSTITUTIONS AND SERVICES

Subtitle IGENERAL PROVISIONS

Ch. 4CERTAIN LENDING PRACTICES

Art. 2LOANS SECURED BY LIEN ON REAL ESTATE

This text of Virginia § 6.2-421 (Certain contracts to permit prepayment; amount of prepayment penalty) is published on Counsel Stack Legal Research, covering Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Va. Code Ann. § 6.2-421 (2026).

Text

A.For the purpose of this section:

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.

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A. For the purpose of this section:

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.

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 § 6.2-422 or 6.2-1409 or (ii) governmentally regulated as to prepayment privilege.