source:
  type: guide
  id: va-m26-7-ch09-t09
  authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 9, Topic 9 — Lender Review
    of Sales Contracts on Proposed
  description: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 9, Topic 9 — Lender
    Review of Sales Contracts on Proposed.
  coverage_tier: operative
obligations:
- id: va-m26-7-ch09-t09-full
  canonical_id: va-m26-7-ch09-t09-full
  section: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 9, Topic 9 — Lender Review
    of Sales Contracts on Proposed
  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 9 — Lender
      Review of Sales Contracts on Proposed
    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: '9. Lender Review of Sales Contracts on Proposed Construction
      Change Date July 30, 2019 • This chapter has been revised in its entirety. a.
      Procedures Prior to requesting an appraisal of proposed construction, the lender
      must review the sales contract or purchase agreement on the property. The lender
      must determine whether the contract: • is acceptable, and • does not contain
      unfair contractual provisions. b. Revisions The lender must request revisions
      of an unacceptable contract by the parties to the transaction. The lender should
      report unacceptable contract practices by a VA program participant (such as
      a builder) to VA if: • the program participant is engaged in practices which
      seriously prejudice the interests of Veterans or the Government, or • the program
      participant repeatedly uses unacceptable contracts or contracts containing unfair
      contractual provisions, and is uncooperative in changing such practices c. Closing
      The closing of the loan indicates that the lender has determined the contract
      is acceptable. d. Examples of Unfair Contract Provisions or Features Example
      Unfair Contract Provisions or Features 1 Provisions allowing the downpayment
      or earnest money of the purchaser to be forfeited or retained as liquidated
      damages if the purchaser cannot obtain VA financing. 2 Inclusion in a lump-sum
      contract of an “escalator clause” which obligates the purchaser to pay a higher
      price in the event of increased costs for labor, material, or other items prior
      to delivery of title unless accompanied by a proviso which gives the purchaser
      the option of canceling the contract and obtaining a refund of the moneys paid,
      if the increased price is not acceptable to the buyer/Veteran. Continued on
      next page VA Pamphlet 26-7, Revised Chapter 9: Legal Instruments, Liens, Escrows,
      and Related Issues 9-18 9. Lender Review of Sales Contracts on Proposed Construction,
      continued d. Examples of Unfair Contract Provisions or Features, continued 3
      Provisions which infringe upon the usual or customary freedom or right of an
      owner to sell a property, except as allowed under 38 C.F.R. 36.4308(e) and 36.4354(b)(5).
      For example, a provision that the purchaser will give a stated real estate agency
      an exclusive listing if he or she resells the property within 2 years after
      acquisition, or will give the seller or another a first option to buy other
      than in a cooperative housing project or as provided in 38 C.F.R. 36.4354(b)(5).
      4 A requirement that purchasers waive or release any claim or right for nonperformance
      by the builder under the contract. This does not prevent a builder from obtaining
      a statement from the purchaser at closing that he or she has inspected the house
      and has not observed any unsatisfactory construction, nor does it prevent the
      builder from obtaining a release from the purchaser in settlement of a bona
      fide dispute. 5 Omission of an accurate property description. 6 Omission of
      a provision specifying whether the builder or the Veteran is to be charged with
      any special assessments or improvement bonds. This includes those assessments
      or bonds which are payable in the future, for improvements included in the plans
      and specifications or commenced or completed at the time of closing, such as
      streets, sidewalks, curbs, gutters, and sewers. 7 Omission of a date for completion
      of proposed construction or failure to give the Veteran the option of canceling
      the contract and obtaining a refund of the deposit if the dwelling is not completed
      on a specified date or within a reasonable time. 8 Failure of a contract covering
      proposed construction to obligate the seller to complete the dwelling in substantial
      accordance with identified and definite plans and specifications. VA Pamphlet
      26-7, Revised Chapter 9: Legal Instruments, Liens, Escrows, and Related Issues
      9-19'
  judgment: false
