Virginia § 6.2-421 - Certain contracts to permit prepayment; amount of prepayment penalty
Full text of Virginia Code of Virginia § 6.2-421 — Certain contracts to permit prepayment; amount of prepayment penalty, with citation guidance and answers to common questions.
§ 6.2-421. Certain contracts to permit prepayment; amount of prepayment penalty
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.
1987, c. 622, §§ 6.1-330.69, 6.1-330.81; 2010, c. 794.
Source: official Virginia text · Last verified 2026-08-27
Frequently Asked Questions About Virginia § 6.2-421
What does Code of Virginia § 6.2-421 cover?
Section 6.2-421 ("Certain contracts to permit prepayment; amount of prepayment penalty") is part of the Code of Virginia, the codified statutory law of Virginia. It sets out the legal rule or procedure described in the text above. Statutes are amended regularly, so always verify against the official source.
How do I cite Virginia § 6.2-421?
A common citation format is "Code of Virginia § 6.2-421" (Virginia). Legal writing may require the code abbreviation, section number, and year or edition. Match the style required by your court, professor, or publisher.
Is this the official text of Virginia law?
No. This page is for research and education and may not include the most recent amendments. For official current law, check the Virginia official source linked on this page or consult a licensed Virginia attorney.
How does Virginia § 6.2-421 apply to my situation?
Statutes are interpreted in context, and application depends on your specific facts. Only a licensed attorney in Virginia can advise on how this section applies to you. Contact your state or local bar association for a referral.
Sources & Verification
Not legal advice. Verify against the official source and consult a licensed attorney in Virginia.