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Topic 4. Land Sale Contracts and Option Contracts
July 30, 2019
This chapter has been revised in its entirety.
a. Eligibility of Land Sale Contracts
VA may guarantee an obligation secured by a land sale contract for the purchase of improved residential property in the same manner as any obligation secured by a mortgage or deed of trust.
The land sale contract must contain the mandatory clauses provided in Topic 1 of this chapter.
The contract must be recorded.
b. Refinance Land Sale Contracts
Pursuant to Title 38 of the U.S.C., subchapter 3710(b)(7)(B), VA may also guarantee a loan to refinance the unpaid balance under a land sale contract for the purchase of improved residential property, provided:
the Veteran will obtain title to the property described in the contract upon closing of the loan, and
the obligation to be guaranteed is in the form of a mortgage note or bond secured by a mortgage or other acceptable form of security instrument other than the existing land sale contract.
c. Eligibility of Option Contracts
Option contracts are not eligible for guaranty; however, VA may guarantee a loan made for the unpaid purchase price of residential property when the option is exercised.