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Why is a Release of Liability (ROL) Important?
If you sell your VA guaranteed home or have the loan assumed and you do not complete a Release of Liability, you may still have liability for any loss to the VA. VA Pamphlet 26-68-1 explains the reasons for a Release of Liability (ROL) as follows:
"If you sell the property which secures your GI loan, remember that you will still be legally liable to the Government on that loan, even though you no longer will be the owner of the property,
unless:
(a) your loan is paid in full in connection with the sale, or
(b) the VA releases you in writing from liability on the loan, or
(c) you sell the property to an eligible veteran with sufficient loan entitlement who agrees to assume your loan and substitute his or her loan entitlement for yours.
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| Note: Please keep in mind that being released from liability does not enable you to have your loan guaranty entitlement restored unless a substitution of entitlement has been completed. |
If you do allow someone to assume your loan and that person defaults on the loan, you may be liable for any financial loss suffered by VA, even though your purchaser assumes personal liability for the repayment of your loan! This is also true if that person sells the home to another person and the new owner defaults.
If you are thinking about selling your property and allowing another person to assume your GI loan, please contact your lender or VA before you sign a sales contract to ask for additional guidance. The lender or VA should provide the necessary forms and instructions on how to obtain a release of liability and/or a substitution of entitlement.
If your VA guaranteed home loan originally closed PRIOR to March 1, 1988, or the Release of Liability request is due to a divorce:
- E-mail us or call (888) 232-2571 ext. 1737.
If your VA guaranteed home loan originally closed AFTER March 1, 1988:
- Contact your lender for further instructions.
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