Does The VA Limit My Ability to Sell the Home?
There are a lot of rules that regulate the real estate buying and selling process. Some are local ordinances, some are state law, and others are federal regulations. When it comes to buying a home with a VA mortgage, there are additional regulations.
Buying a home with a VA mortgage means having the property appraised to make sure the home lives up to physical standards set by the Department of Veterans Affairs. It also means insuring the sale is fair to the buyer, including the ability to freely transfer ownership as needed.
For example, VA regulations do not allow restrictive clauses in home owners agreements or loan contracts which prevent the free sale, transfer or assumption of the property. The lender or homeowner’s association cannot dictate who the veteran sells the home to or when.
VA loans are, by their very nature, designed to be flexible. The veteran borrower must be permitted to let someone else purchase the home or assume the loan if necessary. This is one of the cornerstones of the VA loan program, and the Department of Veterans Affairs has structured its rules to provide maximum flexibility for the sale or transfer of ownership.
And those rules work in both directions. The VA loan applicant cannot be forced to enter into a restrictive covenant or contract as a condition of purchasing the home, but they also must not restrict the sale of the property when the time comes to sell or transfer.
For example, VA borrowers may not refuse any genuine offer because of a potential buyer’s status, race, religion, national origin or other factors as described in the Fair Housing Act.
The VA requires all VA home owners to comply with the Fair Housing act–up to and including cases where the borrower has refinanced the property, moved out and converted the home into a rental property.
VA rules state clearly, “The veteran certifies…Neither the veteran, nor anyone authorized to act for the veteran, will refuse to sell or rent, after the making of a bona fide offer, or refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny the dwelling or property covered by this loan to any person because of race, color, religion, sex, handicap, familial status or national origin”.
According to the VA, such illegal restrictive practices, covenants or agreements are not recognized under the law–rendering them void under the terms of the VA loan program. The VA states, “any such covenant is specifically disclaimed…civil action for preventive relief may be brought by the Attorney General of the United States in any appropriate U.S. district court against any person responsible for a violation of the applicable law.”
The bottom line? The terms of a VA home loan application include agreeing to abide by the Fair Housing Act when it comes time to sell or transfer the property.