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VA Escape Clause – VA Home Loans – Veterans Affairs (.gov)

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Regulatory requirements stipulate that a Loan Guaranty Certificate may not be issued for a loan to finance a contract that was signed prior to the Veteran’s receipt of the notice of value (NOV), unless the contract includes, or is amended to include, the following “escape” clause:
 “It is expressly agreed that, notwithstanding any other provisions of this contract, the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise be obligated to complete the purchase of the property described herein, if the contract purchase price or cost exceeds the reasonable value of the property established by the Department of Veterans Affairs. The purchaser shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs.”
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U.S. Department of Veterans Affairs | 810 Vermont Avenue, NW Washington DC 20420
Last updated January 3, 2023

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