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2006 SESSION
Be 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.