A number of local government attorneys have been asking tough questions about HB 374 and SB 632, identical bills which became effective law on July 1. 2010 Va Acts of Assembly ch. 549, 2010 Va Acts of Assembly ch. 613.

The text of the new law says:

“§ 1. Notwithstanding the provisions of any cash proffer requested, offered, or accepted pursuant to § 15.2-2298, 15.2-2303, or 15.2-2303.1 of the Code of Virginia for residential construction on a per-dwelling unit or per-home basis, cash payment made pursuant to such a cash proffer shall be collected or accepted by any locality only after completion of the final inspection and prior to the time of the issuance of any certificate of occupancy for the subject property.”

These bills were adopted as a priority of the Home Builders Association of Virginia as a benefit to struggling homebuilders. They were intended to save the financing costs on money borrowed to pay the cash proffer between the date of the building permit (when these have been paid in most cases) and the date of the certificate of occupancy (when the builder can close on the home and pay off the debt).

Good for the homebuilders. But there are issues.