What is a VA Amendatory Escape Clause?

A man signing the VA amendatory escape clauseThe VA escape and amendatory clauses are pivotal in ensuring transparency and protection for buyers and sellers involved in a real estate transaction. A key document in VA loans, the amendatory clause informs buyers about the property's appraised value, safeguarding against overpaying.

Meanwhile, the VA escape clause provides flexibility for buyers in the event of an appraisal below the agreed-upon price. Understanding these clauses is crucial in navigating VA loan processes, and their significance extends to real estate transactions, offering a balance between buyer and seller interests.

Delving into the details of the VA escape and amendatory clauses is essential for a smooth and informed homebuying experience.

Here is the Amendatory Clause:

"It is expressly agreed that, notwithstanding any other provision of this contract, the purchaser shall not be subject to any penalty, including forfeiture of earnest money, or be obligated to complete the purchase of the property described herein, if the contract purchase price or cost exceeds the property's reasonable Value as determined by the Department of Veterans Affairs."

This clause says that the Veteran is free to back out of the sale if the appraisal comes in lower than the purchase price. Any money put down as a down payment will be returned to the Veteran.

The amendatory clause formalizes what most home buyers want in a purchase deal.

Buyers often insist on an appraisal contingency in most purchase agreements, whether VA loans or not. This contingency enables purchasers to cancel the purchase and retain their earnest money if the property appraises below the contract price.

Can You Avoid the VA Amendatory Escape Clause When Buying a House?

The VA amendatory escape clause is vital to the VA home buying process. It serves as an appraisal contingency, which is present in many sales contracts, regardless of whether VA loans are involved. This clause allows homebuyers to cancel the purchase and keep their earnest money if the property's appraisal falls below the contract price.

It's important to note that the VA amendatory escape clause is not associated with VA loan cancellation or VA loan prepayment penalties. Instead, it specifically addresses the appraisal aspect of the transaction, ensuring that buyers are protected if the property's appraised Value is lower than the agreed-upon price.

When considering a VA loan, you must familiarize yourself with all aspects, including VA loan points, VA loan closing costs, and the overall process of obtaining a VA mortgage. This knowledge empowers veterans and service members in their journey toward VA homeownership.

What Happens if the VA Appraisal Comes in Lower Than the Purchase Price?

The VA amendatory escape clause is an essential consideration in the context of VA home buying and VA homeownership. It ensures that the VA home loan or VA mortgage cannot be issued for an amount that exceeds the property's appraised Value.

If the appraised value is lower than the agreed-upon sales price, there are four options to address the difference:

1. Reconsideration of Value

A reconsideration of Value (ROV) may be the best choice for a low-quality VA appraisal.
Suppose you are a veteran or active duty military member using your VA home loan benefit to purchase a home. In that case, it's essential to understand the VA amendatory escape clause. This clause allows you to get a reconsideration of Value from the VA if the appraisal comes in lower than the purchase price. The key is to act quickly—you have just 60 days from the date of closing to submit your request.
If other comparable properties can be found to substantiate a higher Value, the Veteran's Administration could reconsider its determination of Value.

2. Ask the Home Seller to Reduce the Sales price.

Common approaches can be employed when facing a low appraisal in a VA home buying situation, such as utilizing the VA amendatory escape clause. One strategy that VA house buyers often use is negotiating a price reduction with the seller. This negotiation addresses the disparity between the assessed Value and the sales price.

It's not uncommon for homes to be listed and sold for more than their actual worth. However, if the VA appraisal reveals a lower value, it signals to the seller that their property may not be valued as highly as initially thought. As a result, they may be willing to adjust the asking price to align with the appraised Value. Doing so increases the likelihood of the VA loan being approved for the buyer, facilitating VA homeownership.

If you're interested in exploring options related to VA home loans or VA mortgages, including the VA amendatory escape clause, VA home buying, or VA homeownership, feel free to reach out for further assistance. I'm here to help you navigate through the process.

3. The Veteran Can Cover the 'Appraisal Gap' in Cash.

Another option in a hot market or facing other home buyers is bidding on the house, which means paying the difference between the appraised value and the sales price.
According to the Department of Veteran Affairs:
The purchaser shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable Value established by the Department of Veterans Affairs (Authority: 38 U.S.C. 501, 3703(c)(1))."

4. Split the difference with the seller.

When buying a property, getting an appraisal is essential to determining its Value and ensuring the price is fair. If you're using a VA loan, you'll need to have a VA appraisal done, and you may also need to sign the VA escape clause form. You'll typically need to provide earnest money to show your commitment to the purchase.

If the appraised Value comes in lower than the purchase price, you may be able to negotiate with the seller to lower the price. Alternatively, you could ask the seller to split the difference between the appraised Value and the purchase price. The provisions of this contract will outline how this process will work and what steps the purchaser will take.

Working closely with your mortgage lender and the real estate agent ensures the purchase goes smoothly and that everything meets your expectations. Be prepared to sign the VA appraisal and other necessary forms, and make sure you fully understand all aspects of the purchase before committing to it.

Is the VA Loan Escape Clause Negotiable?

It is important to note that the VA amendatory escape clause is not negotiable. This clause is an appraisal contingency for VA loans and requires both the seller and buyer to sign. The VA amendatory escape clause is a crucial component of the VA loan process. It is designed to protect both parties from discrepancies during the appraisal process. So, any attempts to renegotiate or modify this clause are not allowed.

Who Signs the VA Amendatory Escape?

Before signing the purchase contract, the borrowers and sellers must sign the VA amendatory clause (escape clause); otherwise, the VA will not guarantee the loan when it closes. When both the buyer and the seller sign the paper, it becomes legally binding for all parties concerned.

Why Does the Department of Veterans Affairs Have an Escape Clause?

The VA has an escape clause with home purchases to protect veterans and ensure they get a fair deal. The VA's escape clause allows veterans to withdraw from a contract without penalty if the property's appraised Value exceeds the agreed-upon purchase price. If you're looking to buy a home using your VA benefits, you won't be stuck with a bad deal just because you've already signed the dotted line.

The reason behind this escape clause is simple: it's all about protecting veterans. The VA understands that many service members may not have extensive experience in real estate transactions and may be unfamiliar with local housing markets or wary of being taken advantage of by unscrupulous sellers.


In conclusion, the VA Amendatory Escape Clause plays a crucial role in safeguarding the interests of both buyers and sellers in a real estate transaction involving a VA loan. Don't overlook its significance!

Please take the next step today by consulting with a knowledgeable VA-approved lender or visiting our website to learn more about the VA Amendatory Escape Clause and ensure you thoroughly understand its implications.

This valuable information allows you to navigate home-buying and protect your interests confidently.

Escape Clause for the Sales Contract

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