source:
  type: guide
  id: va-m26-7-ch09-t03
  authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 9, Topic 3 — Title Limitations
  description: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 9, Topic 3 — Title
    Limitations.
  coverage_tier: operative
obligations:
- id: va-m26-7-ch09-t03-full
  canonical_id: va-m26-7-ch09-t03-full
  section: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 9, Topic 3 — Title Limitations
  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 3 — Title
      Limitations
    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: '3. Title Limitations Change Date July 30, 2019 • This chapter
      has been revised in its entirety. a. Estate of the Veteran in the Property VA
      regulations at 38 C.F.R. 36.4354 provide the parameters for the required estate
      of a Veteran in real property securing a VA-guaranteed loan. The lender is responsible
      for ensuring the loan conforms to these parameters. For IRRRLs (see Chapter
      6, Topic 6, Item k of this handbook). A beneficial interest in a revocable Family
      Living Trust that ensures that the Veteran, or Veteran and spouse, have an equitable
      life estate, provided the lien attaches to any remainder interest and the trust
      arrangement is valid under state law. b. Estate Title Generally, title to the
      estate shall be that which is acceptable to informed buyers, title companies,
      and attorneys in the community in which the property is situated. c. Mortgage
      Note or Deed VA does not allow an individual to take title to a property if
      that individual is not on either the mortgage note or a mortgage deed of trust.
      Accordingly, if a spouse or other owner does not want to sign a mortgage note
      and be obligated for a VA-guaranteed home loan that individual must sign a mortgage
      deed of trust. d. Title Insurance VA does not require a lender making a VA loan
      or the Veteran-borrower to obtain title insurance. The lender may apply its
      own title insurance requirements to VA loan transactions. VA requires only that
      title to the property meet the standards described above in “Estate of the Veteran
      in the Property.” Continued on next page VA Pamphlet 26-7, Revised Chapter 9:
      Legal Instruments, Liens, Escrows, and Related Issues 9-6 3. Title Limitations,
      continued e. Restrictions on the Purchase or Resale of Properties Restrictions
      on the purchase or resale of the property are unacceptable to VA, with certain
      exceptions. The lender must: • ensure any restrictions fall within the exceptions
      provided by VA regulations at 38 C.F.R. 36.4308 and 38 C.F.R. 36.4354; • consult
      VA where doubt exists; • obtain VA approval where required; and • fully inform
      the Veteran and obtain his or her consent to the restrictions in writing at
      the time of loan application. f. Examples of Restrictions that Require VA Approval
      A lender may not accelerate a loan based on the sale of the secured property
      unless the acceptability of the assumption of the loan has not been established
      pursuant to Section 38 U.S.C. 3714, except that: • Under 38 C.F.R. 36.4309(b),
      VA may guarantee a loan made through a state, territorial, or local government
      program where restrictions in the legal instruments require acceleration of
      the loan if it is assumed by a party ineligible for assistance under the program.
      • Such acceleration must be mandated by federal, state, territorial, or local
      law or regulation. VA may guarantee a loan made through a state or local government
      program, designed to assist low-or moderate-income individuals, which imposes
      resale and price restrictions on purchasers. Under such a program, if the property
      is resold within a period established by local law or ordinance, certain restrictions
      as set forth in 38 C.F.R. 36.4354(b)(5)(iv)(A) on to whom the property may be
      sold, the resale price, and other restrictions approved by the Secretary may
      be applied. VA may guarantee a loan on which a title restriction limits the
      sale, lease, or occupancy of the dwelling to persons based on age, including
      a prohibition against the permanent occupancy of the dwelling by children, provided
      such restriction complies with applicable federal law (38 U.S.C. 3704(c)). VA
      may refuse to approve a property with an age restriction if its operation would
      create an undue hardship upon the owner in the case of sudden, unforeseen events
      or be likely to result in an increased risk of loan default. Continued on next
      page VA Pamphlet 26-7, Revised Chapter 9: Legal Instruments, Liens, Escrows,
      and Related Issues 9-7 3. Title Limitations, continued g. Examples of Restrictions
      That Do Not Require VA Approval Title to property involving reasonable encroachments,
      easements, servitudes, and reservations for water, timber, or subsurface rights,
      generally do not require VA approval. However, they must be taken into consideration
      in determining reasonable value. If any of these restrictions impact the basic
      livability of the property (meeting minimum property standards), VA approval
      is required. h. Effect of Title Limitations on Reasonable Value Title conditions
      or limitations must be shown on the NOV and considered by the appraiser in determining
      the reasonable value of the property. If the lender discovers, prior to loan
      closing, title conditions or limitations not shown on the NOV, the lender must
      have VA review the conditions and determine whether the value assigned to the
      property is materially affected. Without such a determination by VA, the lender
      risks a later finding that the condition or limitation affects the reasonable
      value of the property to the extent that: • the loan will be ineligible for
      guaranty, or • a claim on the guaranty will be subject to reduction under 38
      C.F.R. 36.4325. VA Pamphlet 26-7, Revised Chapter 9: Legal Instruments, Liens,
      Escrows, and Related Issues 9-8'
  judgment: false
