COURT OF APPEALS OF VIRGINIA
Record No. 0654-24-1
PATRICK J. KENNEDY
v.
KEVIN S. ALMOND, ET AL.
Present: Judges Malveaux, Friedman and Lorish
Argued at Norfolk, Virginia
Opinion Issued September 29, 2026
FROM THE CIRCUIT COURT OF YORK COUNTY
Michael E. McGinty, Judge Designate
Jonathan M. Young (Tidewater Trial Lawyers, P.C., on brief), for appellant.
Ahmed E. Mohamed Khalil (Mark A. Short; Kaufman & Canoles, P.C., on brief), for appellees.
PUBLISHED OPINION BY
JUDGE FRANK K. FRIEDMAN
The unique facts of this case demonstrate that even a seemingly clear and well-crafted
standardized real estate contract can devolve into confusion when unforeseen events occur.
Appellant Patrick Kennedy contracted with Kevin Almond and Peninsula Realty, LLC
(collectively, the sellers) to purchase a property in Seaford, Virginia. In the event that the
purchase price exceeded the reasonable value of the property (as determined by an appraisal), the
purchase agreement gave Kennedy the option to (1) walk away from the deal; or (2) “proceed[]
with the consummation of th[e] Agreement without regard to the amount of the reasonable
value.” After the appraisal revealed that the purchase price did, in fact, exceed the reasonable
value of the property, Kennedy opted to proceed and renegotiate with the sellers for a better
price.
The renegotiation produced an addendum that resulted in a lower purchase price that still
exceeded the appraised value of the property. The addendum noted that, aside from the reduced
price, the other terms of the agreement “shall remained unchanged.” Less than two weeks after
renegotiating the purchase price, Kennedy backed out of the deal. After the sellers sued, the trial
court found Kennedy in breach of the contract.
Finding no error, we affirm the trial court’s judgment.
BACKGROUND1
The Contract Terms
On April 3, 2021, Kennedy entered into a standard REIN contract2 with the sellers. The
original purchase price for the property was $845,000. Kennedy planned to finance the purchase
with a loan from the Department of Veterans Affairs (VA). Section 11(A) of the contract states:
It is expressly agreed that, notwithstanding any of the provisions of
this Agreement, Buyer shall not incur any penalty by forfeiture of
earnest money or otherwise be obligated to complete the purchase
of the Property described by the Agreement if the agreed purchase
price or cost exceeds the reasonable value of the Property
established by the Veterans Administration. Buyer shall, however,
have the privilege and option of proceeding with the
consummation of this Agreement without regard to the amount of
the reasonable value established by the Department of Veterans
Affairs.
The VA explains on its website that it will cap its home loans at the lesser of the agreed-upon
purchase price or the reasonable value. VA Escape Clause, U.S. Dep’t of Veterans Affs. (Jan.
14, 2026), https://www.benefits.va.gov/homeloans/escape-clause.asp; see Code § 8.01-388 (“The
court shall take judicial notice of the contents of all official publications . . . of the United States
1
“We review the evidence in the light most favorable to the prevailing party, in this instance the [sellers].” W. Refin. Yorktown, Inc. v. County of York, 292 Va. 804, 808 (2016).
2
The contract is a Real Estate Information Network, Inc. (REIN) Standard Purchase Agreement.
-2-. . . and of the political subdivisions and agencies of each published within those jurisdictions.”).
So, this “escape clause” protects buyers from having to pay more than the VA will loan them.3
About two weeks after the parties entered into the contract, the VA appraised the
property at $750,000. After some negotiation, the parties executed an addendum to the contract
on April 22, 2021. The addendum reduced the purchase price from $845,000 to $781,000—still
$31,000 greater than the property’s reasonable value, per the appraisal. The addendum also
stated that, “[e]xcept as expressly set forth above, all of the other terms and conditions of the
Agreement not modified above, shall remain unchanged and in full force and effect.” The
amended agreement provided for a settlement date in early May, with the sellers to “keep
possession of the home through 5pm on 5/10/2021.”
Kennedy Walks Away from the Deal Leading to Litigation
After inspecting the property further, Kennedy backed out of the deal. At his instruction,
his agent sent a notice of termination on May 4, 2021, explaining only that “Buyer decided not
[to] move forward [b]ased on Paragraph 11 A.” In short, relying on the first sentence of § 11(A),
Kennedy took the position that he could scuttle the deal at any time as long as the purchase price
remained above the appraised value.
Two weeks later, counsel for the sellers sent a letter demanding that Kennedy close on
the property within 10 days. Kennedy did not close, so the sellers filed suit. They alleged that
Kennedy breached the contract. Almond sought damages for the difference between the price he
had negotiated with Kennedy and the significantly lower amount he ultimately received after
selling the property to a different buyer. Peninsula Realty sought lost brokerage fees. And all
3
The provision at issue in this case is not unique to REIN contracts. Rather, it is a mandatory part of any VA home loan purchase contract, with language dictated by federal regulation. See 38 CFR § 36.4303(k)(4); VA Escape Clause, U.S. Dep’t of Veterans Affs. (Jan. 14, 2026), https://www.benefits.va.gov/homeloans/escape-clause.asp.
-3-the sellers sought attorney fees. Kennedy, in turn, filed a counterclaim, seeking the return of his
earnest money deposit and attorney fees.
The central issue of the case was (and still is, on appeal) the interpretation of § 11(A).
Kennedy contended that § 11(A) authorized his termination of the deal because the renegotiated
purchase price still exceeded the appraised property value. The sellers argued that Kennedy gave
up any right to rely on the “escape clause” a second time by renegotiating the price after he
learned the appraisal value. They argued that after the appraisal came in below the original
purchase price, § 11(A) presented Kennedy with a choice: rescind or proceed. Kennedy elected
to proceed by signing an addendum for the renegotiated price, so, according to the sellers, he
could not take advantage of § 11(A)’s contingency again after the appraised value was known to
him.
Extrinsic Evidence is Introduced at Trial Without Objection
At trial, without objection, Dale Chandler, the principal broker at Peninsula Realty and a
member of the REIN sale management advisory committee, was certified as an expert in
residential real estate brokerage and REIN forms. He testified that, despite having worked in
real estate for many years using these standard REIN contracts, this was the first time he had
ever experienced a buyer attempting to use § 11(A) to back out of a deal after renegotiating the
price with the seller. He said that he had seen buyers use the contingency in § 11(A) “[h]undreds
of times” and that, in every case, “the parties either renegotiated the price or . . . the VA buyer
had just walked.”
Charles Dunlap, the principal broker for Garrett Realty Partners (GRP), also testified
without objection and was certified as an expert in residential real estate brokerage and REIN
forms. GRP had represented Kennedy as his agent before he backed out of the sale. Dunlap
testified that it was his view that once a buyer decides to proceed with a purchase despite a low
-4-appraisal, he cannot then use the escape clause to renege. He also testified that he explained this
interpretation to Kennedy and told him that he could not back out of the deal after renegotiating
the price; Kennedy then terminated his representation agreement with GRP.
Kennedy, on the other hand, testified that he never intended to waive or abandon his
ability to terminate the agreement when he signed the addendum. He interpreted the addendum’s
language, which purported to keep all of the unmodified terms of the original agreement in place,
to mean that his option under § 11(A) was still in effect.4
The Trial Court’s Ruling
At the conclusion of the bench trial, the court ruled for the sellers. The court first
acknowledged that this was a novel issue, saying “there’s nothing really directly on point on
this.” It then held that under § 11(A), “you have two option[s]. You can walk away or you can
proceed with the agreement and negotiate or renegotiate.” Section 11(A), said the court, does
not give a buyer endless “bites at the apple.” The court reasoned that by renegotiating and
agreeing to the addendum after the appraisal came in, Kennedy had opted to proceed with the
“consummation of this Agreement,” and had given up his right to “walk away” without
consequences thereafter. Accordingly, the court found Kennedy in breach of the contract and
ordered him to pay $96,000 to Almond, $46,860 to Peninsula Realty, and $37,474 in attorney
fees. It also denied Kennedy’s counterclaim. Kennedy appeals seeking to overturn the
judgment, regain his earnest money deposit, and recover his attorney fees.
4
Notably, emails Kennedy sent to GRP on May 4, 2021 may also provide insight into why he decided to back out of the deal. The emails stated, “From my walk through and engineering report, it is clear the home is in disrepair and the seller/owner/contracting company owner/real estate listing agent did not disclose those details. They can’t force me to buy and they can’t sue for a home in disrepair. They can disagree but documented and photographic evidence will prevail,” and, “As my lead broker, I need you to help me get out of this.”
-5-ANALYSIS
I. Standard of Review
Interpretation of a contract is a question of law that we review de novo. Palmer &
Palmer Co., LLC v. Waterfront Marine Constr., Inc., 276 Va. 285, 289 (2008). When
interpreting a contract, we look to the “intention of the parties as expressed by them in the words
they have used.” Schuiling v. Harris, 286 Va. 187, 192 (2013) (quoting Wilson v. Holyfield, 227
Va. 184, 187 (1984)). “The search for . . . plain meaning does not myopically focus on a word
here or a phrase there.” Erie Ins. Exch. v. EPC MD 15, LLC, 297 Va. 21, 28 (2019). Rather, the
“contract must be construed as a whole and the intention of the parties is to be collected from the
entire instrument and not from detached portions.” Sweely Holdings, LLC v. SunTrust Bank, 296
Va. 367, 376-77 (2018) (quoting Babcock & Wilcox Co. v. Areva NP, Inc., 292 Va. 165, 180 n.8
(2016)); see also Schuiling, 286 Va. at 193 (“We construe the contract as a whole, giving terms
their ordinary meaning unless some other meaning is apparent from the context.”).5
II. The Trial Court Correctly Interpreted the Contract
The parties agree that if the addendum had lowered the price to $750,000 (the appraised
value) or less, there would be no issue and Kennedy would be bound by the agreement. The
problem here is that the renegotiated price still exceeded the appraised value. So, the main
5
Only when a contract is ambiguous can a court consider information outside of the four corners of the document. See Robinson-Huntley v. George Wash. Carver Mut. Homes Ass’n., 287 Va. 425, 429 (2014) (“When an agreement is plain and unambiguous on its face, the Court will not look for meaning beyond the instrument itself.”). “Contract language is ambiguous when ‘it may be understood in more than one way or when it refers to two or more things at the same time.’” Eure v. Norfolk Shipbuilding & Drydock Corp., 263 Va. 624, 632 (2002) (quoting Granite State Ins. Co. v. Bottoms, 243 Va. 228, 234 (1992)). But “[a] contract is not ambiguous merely because the parties disagree as to the meaning of the terms used.” TM Delmarva Power, L.L.C. v. NCP of Va., L.L.C., 263 Va. 116, 119 (2002). If ambiguity exists, it “must appear on the face of the instrument.” Video Zone, Inc. v. KF&F Props., L.C., 267 Va. 621, 626 (2004). Further, “[t]he issue whether a contract provision is ambiguous presents a question of law, not of fact,” so we review the question de novo. Id. at 625.
-6-question is: In the event that the purchase price continues to exceed the reasonable value of the
property, is § 11(A) a one-time fork in the road for the buyer, or is it an ongoing option—an
escape hatch that remains open until the buyer closes on the property? The sellers argue for the
former interpretation, while Kennedy argues for the latter. We agree with the sellers.
A. The Parties’ Diverging Interpretations
Under the sellers’ interpretation of § 11(A), if the VA’s appraisal comes in below the
purchase price, § 11(A) gives the buyer a choice: he can either terminate the contract and walk
away unscathed, or he can “proceed[] with the consummation of” the agreement. This is a
one-time option. And crucially, renegotiating and agreeing on a new price is considered
“proceeding with the consummation” of the agreement—even if the renegotiated price still
exceeds the appraisal value. To use the trial court’s language, § 11(A) creates a fork in the road;
once the buyer secures a renegotiated price on the “consummation” path with full knowledge of
the appraisal and resulting financial consequences, he cannot backtrack.
Kennedy has a different understanding of the contract. He suggests that § 11(A) gives
the buyer a continuous right to terminate the agreement whenever the purchase price is above the
reasonable value of the property as determined by the VA. According to Kennedy, the second
sentence of § 11(A) simply allows the buyer to close on the property even if the purchase price
exceeds the appraisal value; it never requires the buyer to do so. So, under Kennedy’s reading,
even if the parties renegotiate the purchase price after the property is appraised, the buyer can
still terminate the agreement so long as the purchase price exceeds the property’s value.
Kennedy also points out that the addendum at issue states that “[e]xcept as expressly set forth
above, all of the other terms and conditions of the Agreement not modified above, shall remain
unchanged and in full force and effect.” This addendum provision, says Kennedy, shows that the
parties intended for him to retain the right to terminate the agreement, under § 11(A), even after
-7-the price was reduced to $781,000. If all terms of the original agreement “remain unchanged”
after the price was reduced, he reasons that the “escape clause” in § 11(A) remains open to him.
B. The Terms of the Agreement are Unambiguous—Albeit Complicated—and
Support the Seller’s Reading
Here, the trial court determined that the contract language created a one-time option for
the buyer in the event that the appraised value was less than the purchase price. By corollary, the
court found that the parties did not intend to give Kennedy the right to walk away from the deal
at any time so long as the purchase price exceeded the appraised value. We find the trial court’s
reading of the language to be the only plausible interpretation of the provision, particularly
considering Section 11(A)’s purpose in the context of the entire contract.
Again, Section 11(A) provides:
It is expressly agreed that, notwithstanding any of the provisions of
this Agreement, Buyer shall not incur any penalty by forfeiture of
earnest money or otherwise be obligated to complete the purchase
of the Property described by the Agreement if the agreed purchase
price or cost exceeds the reasonable value of the Property
established by the Veterans Administration. Buyer shall, however,
have the privilege and option of proceeding with the
consummation of this Agreement without regard to the amount of
the reasonable value established by the Department of Veterans
Affairs.
(Emphases added).
The trial court observed that Kennedy’s interpretation of the contract placed great
emphasis on the first sentence of § 11(A)—but gave short shrift to the second sentence which
states that the buyer “shall, however, have the privilege and option of proceeding with the
consummation of this Agreement” regardless of the low appraisal. The “option and privilege” is
to proceed with the consummation of the purchase. This language is most clearly read to provide
that once the buyer has secured a price reduction and elected to proceed in spite of a low
appraisal, the wheels of consummation have been set in motion and the buyer no longer has the
-8-choice to back out of the purchase under § 11(A). Moreover, the second sentence goes on to
state that if the buyer elects to exercise the “option of proceeding,” then he does so “without
regard” to the appraised value. This undercuts Kennedy’s suggestion that he remains free to
renege if the renegotiated appraised value is above the purchase price—if he proceeds, the
amount of the appraisal or reasonable value no longer matters.6
The sellers’ reading of § 11(A) is consistent with the language employed by the parties;
the first sentence allows a buyer to walk away without consequences if the purchase price
exceeds the property’s appraised value. This is important because, as noted above, the VA caps
its home loans at the lesser of the agreed-upon purchase price or the appraised value. If the
appraised value is below the purchase price, the buyer will need to dig deeper into his own
pocket to buy the property. Thus, sentence one of Section 11(A) provides an escape clause in
that unforeseen setting; but sentence two allows the purchaser to proceed with—and
consummate—the deal if he chooses to do so with full knowledge of the appraisal.
In sum, § 11(A) protects the buyer from having to pay more than the VA will loan him.
It does not grant the buyer the right to back out of the deal at the last second.7 When the VA’s
appraisal comes in below the purchase price, § 11(A) allows the buyer to either proceed or walk
away. It does not allow him to do both.
6
Ultimately, adopting Kennedy’s interpretation would essentially render the second sentence in the paragraph superfluous, and courts ordinarily resist a reading of a contract that would render the terms meaningless or inconsequential. D.C. McClain, Inc. v. Arlington County, 249 Va. 131, 135-36 (1995) (“No word or clause in the contract will be treated as meaningless if a reasonable meaning can be given to it, and there is a presumption that the parties have not used words needlessly.”).
7
Neither the contract nor the federal regulations appear to state how much time a buyer has to exercise the cancellation option after receiving a low appraisal. We need not address this potential uncertainty here, however, because Kennedy opted not to cancel the deal, but to execute the addendum after reviewing the appraisal.
-9-Kennedy suggests that the addendum somehow revitalizes § 11(A) and permits him to
renege on the renegotiated deal right up to the time of the closing. This proposition is not
supported by the contract language—and represents a fundamental misunderstanding of
§ 11(A)’s purpose. Here, § 11(A) provided an escape clause in the event that the appraisal
turned out to be lower than the purchase price. Upon receiving that information, the buyer could
walk away—but if he, with knowledge of the appraised value, renegotiates a new purchase price
still above the appraised value, he does so with eyes wide open. Section 11(A) offers an escape
clause against unexpected risk—but there is no surprise during the renegotiation after the
appraised value has been firmly established. Put another way, nothing in the addendum operates
to transform § 11(A)’s right to walk away after receiving a low appraisal into an ongoing escape
clause permitting the buyer to back out of the renegotiated deal which the buyer undertook with
full knowledge of the property’s appraised value.8
We conclude that the circuit court properly interpreted § 11(A) and rejected Kennedy’s
efforts to escape the deal. We affirm the circuit court’s reading of the contract language and its
ruling that Kennedy breached the agreement.
8
Broader policy concerns also militate against Kennedy’s suggestion that, after signing the renegotiated deal, § 11(A) still allows him to walk away at any time prior to closing. As a practical matter, under Kennedy’s interpretation, owners and real estate agents would face an unreasonable choice when contracting with buyers using VA home loans. The sellers would essentially be forced to choose between selling their property for the amount at which the VA appraises it (or less) or remaining in a sort of limbo until the date of closing, always unsure whether the buyer would honor the deal or renege on it. This would be particularly problematic given the nature of real estate transactions. Sellers often go to significant expense to rectify defects in, or otherwise improve, property in order to consummate a sale. Furthermore, as was the case here, sellers sometimes agree to purchase other properties while the deal to sell their house is pending, relying upon the knowledge that the buyer must complete the sale or face legal consequences.
- 10 -Ⅲ. The Issue of Extrinsic Evidence
This case is complicated by the fact that, although both parties contended that the
contract was unambiguous, extensive expert testimony was introduced by sellers—without
objection. On appeal, Kennedy suggests the experts’—Chandler’s and Dunlap’s—testimony
contained impermissible conclusions of law, in violation of Code § 8.01-401.3(B). Again,
however, Kennedy did not object to the testimony on this basis at trial either, so the issue is not
preserved. Rule 5A:18.9
In fact, “[w]here parties have reduced their contract to a writing [that] imposes a legal
obligation in clear and explicit terms[,] the writing shall be the sole memorial of that contract,
and it is conclusively concluded that the writing contains the whole contract, and is the sole
evidence of the agreement.” Harris v. Joplin, 304 Va. 338, 348 (2025) (second and third
alterations in original) (quoting Jim Carpenter Co. v. Potts, 255 Va. 147, 155 (1998)). Thus,
when dealing with unambiguous contracts, extrinsic evidence as to the meaning of the writing
generally should not be considered. Id.; see also Pyramid Dev. v. D&J Assoc., 262 Va. 750, 754
(2001) (unambiguous deed).
The trial court, despite admitting the extrinsic evidence below, seemed to base its
decision on the contract terms rather than the expert testimony. We, likewise, rule based on the
unambiguous contract language. Thus, even if Kennedy’s challenges to the expert testimony had
been preserved, which they were not, they would not alter the outcome here. See Doswell P’ship
v. Va. Elec. Power, 251 Va. 215, 223 (1996) (ignoring extrinsic evidence on appeal where the
9
Of course, that does not mean that we would be bound by whatever legal conclusions Chandler and Dunlap may have made. See Rahnema v. Rahnema, 47 Va. App. 645, 658-59 (2006) (“A litigant’s failure to raise an evidentiary objection cannot, ipso facto, enhance the probative weight of evidence that is otherwise incompetent as proof of a particular fact in controversy.” (quoting Exxon Corp v. United States, 45 Fed. Cl. 581, 692 (Ct. Cl. 1999))).
- 11 -contract is unambiguous and finding that any error in considering parol evidence below would be
inconsequential).
Ⅳ. The Circuit Court Properly Rejected Kennedy’s Claims for Return of His Deposit and
Attorney Fees
Because we agree with the trial court’s interpretation of the contract, we need not address
Kennedy’s remaining assignments of error regarding his deposit and attorney fees. Kennedy is
not entitled to the return of his earnest money deposit because he breached the contract. And he
is not entitled to attorney fees because he is not the “prevailing party.” See Prevailing Party,
Black’s Law Dictionary (12th ed. 2024) (“[a] party in whose favor a judgment is rendered,
regardless of the amount of damages awarded”).
CONCLUSION
For the foregoing reasons, we affirm the trial court’s judgment.
Affirmed.
- 12 -