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2006 SESSION
066644298Be it enacted by the General Assembly of Virginia:
1. That § 6.1-64 of the Code of Virginia is amended and reenacted as follows:
§ 6.1-64. Construction loans.
Loans made to finance the construction of a building or
otherwise to improve real estate, and having maturities of not to exceed 60 months
if accompanied by a valid and binding agreement to advance an amount equal to
or greater than the construction loan upon the completion of the building or
improvement entered into by an individual, partnership, association, or
corporation acceptable to the bank (and including the bank itself), whether or
not secured by a mortgage or similar lien on the real estate upon which the
building or improvement is being constructed, shall not be considered as a loan
secured by real estate within the meaning of § 6.1-63, but shall be classed as
ordinary commercial loans, unless the terms of the transaction shall be more
favorable than in the absence of a lien, in which case an appraisal shall be
required as provided under § 6.1-63. No bank shall invest in, or be liable in,
any such loans in an aggregate amount in excess of 100 percent of its capital
and surplus, except that any such loans supported by an executed agreement for permanent
financing shall not be included in such aggregate amount. The period of time,
not to exceed sixty months, elapsing prior to the completion of the
improvements shall not be counted in computing the period of forty years and
two months specified in § 6.1-63. Loans made to finance
construction of buildings or otherwise to improve real estate may be made under
this section or under the provisions of § 6.1-65. Loans made under § 6.1-65
shall not be treated as construction loans for purposes of the limitations of
this section.