Legal Question in Real Estate Law in Virginia

Prepayment Penalty

Prepayment Rider states that a prepayment penaly is due if prepayment exceeds 20% of unpaid balance within any 12 month period. Rider further states ''I will pay this prepayment charge whether prepayment is voluntary or the result of acceleration due to my default under this Note or the Security Instrument, except that there sall be no prepayment charge upon acceleration due to the exercise of the due-on-sale clause contained in the Security Instrument.''

Question: If I sell my property does the lender have a right to a prepayment penalty? Does the due-on-sale clause only apply in the event of a default and the lender requires the sale of the property?


Asked on 10/15/03, 6:59 pm

1 Answer from Attorneys
Daniel Press Chung & Press, P.C.

Re: Prepayment Penalty

The exception means that if you sell (which triggers the due on sale clause), you will not owe the prepayment penalty (unless you otherwise owe it due to a prior default and acceleration).

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Answered on 10/15/03, 9:02 pm


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