source:
  type: guide
  id: va-m26-7-ch09-t02
  authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 9, Topic 2 — Escape Clause
    and Notice of Value (NOV)
  description: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 9, Topic 2 — Escape
    Clause and Notice of Value (NOV).
  coverage_tier: operative
obligations:
- id: va-m26-7-ch09-t02-full
  canonical_id: va-m26-7-ch09-t02-full
  section: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 9, Topic 2 — Escape Clause
    and Notice of Value (NOV)
  type: do
  tags:
  - regulator-direct
  - va
  - va-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 9, Topic 2 — Escape
      Clause and Notice of Value (NOV)
    source_class: va-handbook
    source_url: https://www.benefits.va.gov/warms/pam26_7.asp
    snapshot_id: 23782f6842a5daf5
    fetched_at: '2026-05-23T01:53:53Z'
    content_hash: sha256:b7c7fcb001b1097e51e4479c70f74c0d981cc1a7a38109e8cd455e205071d9e8
    paragraph_quote: '2. Escape Clause and Notice of Value (NOV) Change Date July
      30, 2019 • This chapter has been revised in its entirety. a. Sales Contract
      The Escape Clause must be contained in the sales contract for all VA- guaranteed
      loans. The lender is responsible for ensuring that the paragraph is in the sales
      contract prior to closing. In the event the clause is not in the sales contract,
      VA may not guaranty the loan. b. Builders and Realtors The builders/realtors
      that initiate contracts on new construction must ensure that the Escape Clause
      is in the contract and the contract is signed by the Veteran and seller. c.
      Upgrades Upgrades are not considered earnest money and the builder is not required
      to refund this money. When the NOV is below the sales contract price, this clause
      protects the Veteran with negotiation of the sales contract. d. Escape Clause
      If the sales contract was signed by the Veteran prior to receipt of the NOV,
      the contract must include, or be amended to include, the clause below. “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 or 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 (38 U.S.C. 501, 3703(c)(1)).” This clause
      may be found at 38 C.F.R. 36.4303(k)(4) in its entirety. VA Pamphlet 26-7, Revised
      Chapter 9: Legal Instruments, Liens, Escrows, and Related Issues 9-5'
  judgment: false
