RD Instruction 1955-C

Table of Contents

Page 1

PART 1955 - PROPERTY MANAGEMENT

Subpart C - Disposal of Inventory Property

## [TABLE OF CONTENTS]{.underline}

[Sec]{.underline}. [Page]{.underline}

1955.101 Purpose. 1

1955.102 Policy. 1

1955.103 Definitions. 1

1955.104 Authorities and responsibilities. 4A

\(a\) Redelegation of authority. 4A

\(b\) Responsibility. 5

\(c\) Bid or offer acceptance. 5

CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT (CONACT) REAL PROPERTY

1955.105 Real property affected (CONACT). 6

\(a\) Loan types. 6

\(b\) Controlled substance conviction. 6

\(c\) Effects of farm property sales on farm values. 6

\(d\) Highly erodible land. 6A

1955.106 Disposition of farm property. 6A

\(a\) Rights of previous owner and notification. 6A

\(b\) Racial and ethnic consideration. 6A

\(c\) Nonprogram (NP) borrowers. 6B

1955.107 Sale of FSA property (CONACT). 6B

\(a\) Suitable Property. 6B

\(b\) Surplus Property and Suitable Property not

Sold to a Beginning Farmer or Rancher. 9

\(c\) Sale through real estate brokers. 12

1955.108 Sale of (CONACT) property other than FSA property. 12

(08-20-97) PN 280

RD Instruction 1955-C

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[Sec]{.underline}. [Page]{.underline}

1955.109 Processing and closing (CONACT). 12

\(a\) Determining repayment ability and 12

creditworthiness.

\(b\) Credit sale approval authority for 13

Farm Credit Programs loans.

\(c\) Form of payment. 13

\(d\) Farm real property. 13

\(e\) Organization real property. 13

\(f\) Earnest money. 13

\(g\) Closing and reporting sales. 14

\(h\) Classification. 14

\(i\) State supplements. 14

\(j\) Form RD 1910-11, \"Applicant Certification,

Federal Collection Policies for Consumer or

Commercial Debts.\" 14

1955.110 \[Reserved\] 14

RURAL HOUSING (RH) REAL PROPERTY

1955.111 Sale of real estate for RH purposes (housing). 15

1955.112 Method of sale (housing). 15

\(a\) Sales by Rural Development. 15

\(b\) Real estate brokers. 15

\(c\) Sealed bid or auction. 16

1955.113 Price (housing). 16

\(a\) SFH price reduction. 16

\(b\) MFH price reduction. 17

1955.114 Sales steps for program property (housing). 17

\(a\) Single family housing (SFH). 17

\(b\) Multiple-family housing. 20

\(c\) Single family inventory converted to MFH. 21

\(d\) CONACT residential property suitable for the SFH

program. 22

RD Instruction 1955-C

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[Sec]{.underline}. [Page]{.underline}

RURAL HOUSING (RH) REAL PROPERTY (CON.)

1955.115 Sales steps for nonprogram (NP) property (housing). 22

\(a\) Single Family Housing. 23

\(b\) Multiple family housing. 23

1955.116 Requirements for sale of property not meeting decent,

safe and sanitary (DSS) standards (housing). 24

\(a\) Notices and advertising. 24

\(b\) Sale agreements. 25

\(c\) Quitclaim Deed. 25

\(d\) Release of restrictive covenant. 26

1955.117 Processing credit sales on program terms

(housing). 26

\(a\) Offers. 26

\(b\) Processing. 26

\(c\) Approval. 26A

\(d\) Downpayment. 26A

\(e\) Interest rate. 26A

\(f\) Closing costs. 26A

\(g\) Closing sale. 26A

\(h\) Reporting. 26B

1955.118 Processing cash sales or MFH credit sales on

NP terms. 26B

\(a\) Cash sales. 26B

\(b\) Credit sales. 27

1955.119 Sale of SFH inventory property to a public body

or nonprofit organization. 28A

\(a\) Method of Sale. 28A

\(b\) Price. 28B

\(c\) Decent, safe and sanitary (DSS) standards. 28B

\(d\) Approval and closing. 28B

1955.120 Payment of points (housing). 28B

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RD Instruction 1955-C

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[Sec]{.underline}. [Page]{.underline}

CHATTEL PROPERTY

1955.121 Sale of acquired chattels (chattel). 29

1955.122 Method of sale (chattel). 29

\(a\) Sale to beginning farmers or ranchers. 29

\(b\) Regular sale. 30

\(c\) Auctions. 30

\(d\) Sealed bid sales. 30

\(e\) Negotiated sale. 30

\(f\) Notification. 30

1955.123 Sale procedures (chattel). 31

\(a\) Credit sales. 31

\(b\) Receipt of payment. 31

\(c\) Transfer of title. 31

\(d\) Reporting sale. 31

\(e\) Reporting and disposal of inventory

property not sold. 32

1955.124 Sale with inventory real estate (chattel). 32

1955.125 - 1955.126 \[Reserved\] 32

USE OF CONTRACTORS TO DISPOSE OF INVENTORY PROPERTY

1955.127 Selection and use of contractors to dispose of

inventory property. 32

1955.128 Appraisers. 32

\(a\) Real property. 32

\(b\) Chattel property. 32

1955.129 Business brokers. 32A

1955.130 Real estate brokers. 33

\(a\) Type of listings. 33

\(b\) Listing notices. 34

\(c\) Priority of offers. 34

\(d\) Price. 34

\(e\) Earnest money. 34

\(f\) Commission. 35

\(g\) Nondiscrimination. 36

RD Instruction 1955-C

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[Sec]{.underline}. [Page]{.underline}

USE OF CONTRACTORS TO DISPOSE OF INVENTORY PROPERTY (CON.)

1955.131 Auctioneers. 36

\(a\) Selection criteria. 36

\(b\) Commission. 36

\(c\) Auctioneer restriction. 36

GENERAL

1955.132 Pilot projects. 37

1955.133 Nondiscrimination. 37

\(a\) Title VI provisions. 37

\(b\) Affirmative Fair Housing Marketing Plan. 37

\(c\) Equal Housing Opportunity logo. 37

1955.134 Loss, damage, or existing defects in inventory

real property. 37

\(a\) Property under contract. 37

\(b\) Existing defects. 38

1955.135 Taxes on inventory real property. 38

1955.136 Environmental Assessment (EA) and Environmental

Impact Statement (EIS). 38

1955.137 Real property located in special areas or having

special characteristics. 39

\(a\) Real property located in flood, mudslide hazard,

wetland, or Coastal Barrier Resources

System (CBRS). 39

\(b\) Wetlands located on FSA inventory property. 42

\(c\) Historic preservation. 42B

\(d\) Highly erodible farmland. 43

\(e\) Notification to purchasers of inventory property

with reportable underground storage tanks. 44

\(f\) Real property that is unsafe. 44

\(g\) Real property containing hazardous waste

contamination. 44

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RD Instruction 1955-C

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[Sec]{.underline}. [Page]{.underline}

GENERAL (CON.)

1955.138 Property subject to redemption rights. 44A

1955.139 Disposition of real property rights and title to real

property. 45

\(a\) Easements, rights-of-way, development rights,

restrictions or the equivalent thereof. 45

\(b\) Mineral and water rights, mineral lease interests,

air rights, and agricultural or other leases. 48

\(c\) Transfer of FSA inventory property for conservation

purposes. 48

1955.140 Sale in parcels. 48D

\(a\) Individual property subdivided. 48D

\(b\) Grouping of individual properties. 48E

1955.141 Transferring title. 48E

\(a\) Real property. 48E

\(b\) Chattel. 48E

\(c\) Additional real property documentation. 48E

\(d\) Rent increases for MFH property. 49

\(e\) Interest credit and rental assistance for MFH

property. 49

1955.142 Reporting sale. 49

1955.143 Report on inventory property not sold. 49

\(a\) SFH properties. 49

\(b\) Properties other than housing. 50

1955.144 Disposal of NP or surplus property to, through, or

acquisition from other Agencies. 50

\(a\) Property which cannot be sold. 50

\(b\) Urban Homesteading Program (UH). 51

1955.145 Land acquisition to effect sale. 51

\(a\) Alternate site. 51

\(b\) Additional land. 51

\(c\) Easements or rights-of-way. 51

RD Instructions 1955-C

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[Sec]{.underline}. [Page]{.underline}

GENERAL (CON.)

1955.146 Advertising. 52

\(a\) General. 52

\(b\) Large value and complex properties. 52

\(c\) MFH restrictive-use provisions. 52

\(d\) Racial and socio-economic considerations. 52

\(e\) Rejected application for SFH loan. 52A

1955.147 Sealed bid sales. 52A

\(a\) Opening bids. 53

\(b\) Successful bids. 53

\(c\) Unsuccessful bids. 53

\(d\) Disqualified bids. 54

\(e\) Failure to close. 54

\(f\) No acceptable bid. 54

1955.148 Auction sales. 54

1955.149 Exception authority. 55

1955.150 State Supplements. 56

Exhibits to Subpart C

Exhibit A - Notice of Flood, Mudslide Hazard or Wetland Area.

Exhibit B - Advertising.

Exhibit C - Memorandum of Agreement Between Rural Development

and the Secretary of Housing and Urban Development.

Exhibit D - Sales steps for SFH Inventory Property.

Exhibit E - Sample letter regarding status of an offer to

purchase SFH inventory property.

Exhibit F - \[Reserved\]

Exhibit G - Fact Sheet -- Rural Development SFH Inventory Property for
use

in the HUD HOPE 3 Program

Exhibit H - Conservation Easement for Wetlands

Exhibit I - Conservation Easement for Floodplains

## oOo

(08-20-97) PN 280

RD Instruction 1955-C

PART 1955 - PROPERTY MANAGEMENT

Subpart C - Disposal of Inventory Property

§ 1955.101 [Purpose]{.underline}.

This subpart delegates program authority and prescribes policies and
procedures for the sale of inventory property including real estate,
related real estate rights and chattels. It also covers the granting of
easements and rights-of-way on inventory property. Credit sales of
inventory property to ineligible (nonprogram (NP)) purchasers will be
handled in accordance with Subpart J of Part 1951 of this chapter,
except Community and Business Programs (C&BP) and Multi-Family Housing
(MFH) which will be handled in accordance with this Subpart. In
addition, credit sales of Single Family Housing (SFH) properties
converted to MFH will be handled in accordance with this Subpart. This
subpart does not apply to Farm Service Agency, Farm Loan Programs,
Single Family Housing (SFH) inventory property or to the Rural Rental
Housing, Rural Cooperative Housing, and Farm Labor Housing Programs. In
addition, this subpart does not apply to Water and Waste Programs of the
Rural Utilities Service, Watershed loans, or Resource Conservation and
Development loans, which are serviced under part 1782 of this title.
(Revised 01-09-08, PN 417.)

§ 1955.102 [Policy]{.underline}.

The terms \"nonprogram (NP)\" and \"ineligible\" may be used
interchangeably throughout this subpart, but are identical in their
meaning. Sales efforts will be initiated as soon as property is acquired
in order to effect sale at the earliest practicable time. When a
property is of a nature that it will enable a qualified applicant for
one of the applicable loan programs to meet the objectives of that loan
program, preference will be given to program applicants. Sales are
authorized for program purposes which differ from the purposes of the
loan the property formerly secured, and property which secured more than
one type loan may be sold under the program most appropriate for the
specific property and community needs as long as the price is not
diminished. Examples are: (RH) property; detached Labor Housing or Rural
Rental Housing units may be sold as SFH units; or SFH units may be sold
as a Rural Rental Housing project. All such properties and applicants
must meet the requirements for the loan program under which the sale is
proposed. (Revised 08-20-97, PN 280.)

§ 1955.103 [Definitions]{.underline}. As used in this subpart, the
following apply:

[Approval official]{.underline}. The Agency official having loan and
grant approval authority authorized under Subpart A of Part 1901 of this
chapter.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

DISTRIBUTION: WSAL Account Servicing

Property Management

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## 1

## (Revision 15)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.103 (Con.)

[Auction sale]{.underline}. A public sale in which property is sold to
the highest bidder in open verbal competition.

[Beginning farmer or rancher]{.underline}. A beginning farmer or rancher
is an individual or entity applicant who: (Revised 09-30-93, SPECIAL
PN.)

\(1\) Is an eligible applicant for FO loan assistance in accordance with
§ 1943.12 of Subpart A of Part 1943 of this chapter or\
§ 1980.180 of Subpart B of Part 1980 of this chapter.

\(2\) Has not operated a farm or ranch, or who has operated a farm or
ranch for not more than 10 years. This requirement applies to all
members of an entity.

\(3\) Will materially and substantially participate in the operation of
the farm or ranch.

\(i\) In the case of a loan made to an individual, individually or with
the immediate family, material and substantial participation requires
that the individual provide substantial day-to-day labor and management
of the farm or ranch, consistent with the practices in the county or
State where the farm is located.

\(ii\) In the case of a loan made to an entity, all members must
materially and substantially participate in the operation of the farm or
ranch. Material and substantial participation requires that the
individual provide some amount of the management, or labor and
management necessary for day-to-day activities, such that if the
individual did not provide these inputs, operation of the farm or ranch
would be seriously impaired.

\(4\) Agrees to participate in any loan assessment, borrower training,
and financial management programs required by Agency regulations.

\(5\) Does not own real farm or ranch property or who, directly or
through interests in family farm entities, owns real farm or ranch
property, the aggregate acreage of which does not exceed 30 percent of
the average farm or ranch acreage of the farms or ranches in the county
where the property is located. If the farm is located in more than one
county, the average farm acreage of the county where the applicant\'s
residence is located will be used in the calculation. If the
applicant\'s residence is not located on the farm

## 2

## (Revision 15) 

RD Instruction 1955-C

§ 1955.103 (Con.)

or if the applicant is an entity, the average farm acreage of the county
where the major portion of the farm is located will be used. The average
county farm or ranch acreage will be determined If the farm is located
in more than one county, the average farm acreage of the county where
the applicant\'s residence is located will be used in the calculation.
If the applicant\'s residence is not located on the farm or if the
applicant is an entity, the average farm acreage of the county where the
major portion of the farm is located will be used. The average county
farm or ranch acreage will be determined from the most recent Census of
Agriculture developed by the U.S. Department of Commerce, Bureau of the
Census. State Director will publish State supplements containing the
average farm or ranch acreage by county. (Revised 12-07-05, PN 392.)

\(6\) Demonstrates that the available resources of the applicant and
spouse (if any) are not sufficient to enable the applicant to enter or
continue farming or ranching on a viable scale.

\(7\) In the case of an entity:

\(i\) All the members are related by blood or marriage.

\(ii\) All the stockholders in a corporation are qualified beginning
farmers or ranchers.

[Borrower]{.underline}. An individual or entity which has outstanding
obligations to the FSA under any Farmer Programs loan(s), without regard
to whether the loan has been accelerated. A borrower includes all
parties liable for the FSA debt, including collection-only borrowers,
except for debtors whose total loans and accounts have been voluntarily
or involuntarily foreclosed or liquidated, or who have been discharged
of all FSA debt. (Added 09-30-93, SPECIAL PN.)

[Capitalization value]{.underline}. The value determined in accordance
with Subpart E of Part 1922 of this chapter. (Revised 08-25-93, PN 211.)

[Closing agent]{.underline}. An attorney or title insurance company
approved to close loans according to Subpart B of Part 1927 of this
chapter.

(Revised 03-31-92, SPECIAL PN.)

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## 2A

## (Revision 7)

## (08-24-88) SPECIAL PN 

RD Instruction 1955-C

§ 1955.103 (Con.)

## 

## 

[CONACT or CONACT property]{.underline}. Property acquired or sold
pursuant to the Consolidated Farm and Rural Development Act (CONACT).
Within this subpart, it shall also be construed to cover property which
secured loans made pursuant to the Agriculture Credit Act of 1978; the
Emergency Agricultural Credit Adjustment Act of 1978; the Emergency
Agricultural Credit Act of 1984; the Food Security Act of 1985; and
other statutes giving agricultural lending authority to FSA. (Revised
8-25-88, SPECIAL PN.)

[Credit sale]{.underline}. A sale in which financing is provided by the
Agency to an applicant for the purchase of inventory property.

[Decent, safe and sanitary (DSS) housing]{.underline}. Standards
required for the sale of Government acquired SFH, MFH and LH structures
acquired pursuant to the Housing Act of 1949, as amended. \"DSS\"
housing unit(s) are structures which meet the requirements of the Agency
as described in Subpart A of Part 1924 of this chapter for existing
construction or if not meeting the requirements:

\(1\) Are structurally sound and habitable,

\(2\) Have potable water supply,

\(3\) Have functionally adequate, safe and operable heating, plumbing,
electrical and sewage disposal systems,

\(4\) Meet the Thermal Performance Standards as outlined in Exhibit D of
Subpart A of Part 1924 of this chapter, and

\(5\) Are safe; that is, a hazard does not exist that would endanger the
safety of dwelling occupants.

[Eligible terms]{.underline}. Credit terms, for other than SFH or MFH
property sales, prescribed in FSA program regulations for its various
loan programs; available only to persons/entities meeting eligibility
requirements set forth for the respective loan program. For SFH and MFH
properties, see the definition of \"Program terms.\"

[Farmer program loans]{.underline}. This includes Farm Ownership (FO),
Soil and Water (SW), Recreation (RL), Economic Opportunity (EO),
Operating (OL), Emergency (EM), Economic Emergency (EE), Special
Livestock (SL), Softwood Timber (ST) and Rural Housing loans for farm
service buildings (RHF). (Added 10-14-88, SPECIAL PN.)

## 2B

## (Revision 4) 

RD Instruction 1955-C

§ 1955.103 (Con.)

[Homestead Protection]{.underline}. (FP only) The program which permits
former farmer Program borrowers to lease their former principal
residence with an option to buy. See Subpart S of part 1951 of this
chapter. (Added 10-14-88, SPECIAL PN.)

[Indian reservation]{.underline}. All land located within the limits of
any Indian reservation under the jurisdiction of the United States
notwithstanding the issuance of any patent and including rights-of-way
running through the reservation; trust or restricted land located within
the boundaries of a former reservation of a federally recognized Indian
tribe in the State of Oklahoma; or all Indian allotments the Indian
titles to which have not been extinguished if such allotments are
subject to the jurisdiction of a federally recognized Indian tribe.
(Added 10-14-88, SPECIAL PN.)

2C

(Added 12-15-04, SPECIAL PN.)

RD Instruction 1955-C

§ 1955.103 (Con.)

[Ineligible terms]{.underline}. Credit terms, for other than SFH or MFH
property sales, offered for the convenience of the Government to
facilitate sales; more stringent than terms offered under the Agency\'s
loan programs. Applicable when the purchaser does not meet program
eligibility requirements or when the property is classified as surplus.
Loans made on ineligible terms are classified as Nonprogram (NP) loans
and are serviced accordingly. For SFH and MFH properties, see the
definition of \"Nonprogram (NP) terms.\"

[Inventory property]{.underline}. Property for which title is vested in
the Government and which secured an Agency loan or which was acquired
from another Agency for program purposes.

[Market value]{.underline}. The most probable price which property
should bring, as of a specific date, in a competitive and open market,
assuming the buyer and seller are prudent and knowledgeable, and the
price is not affected by undue stimulus such as forced sale or loan
interest subsidy.

[Negotiated sale]{.underline}. A sale in which there is a bargaining of
price and/or terms.

[Nonprogram (NP) property]{.underline}. SFH and MFH property acquired
pursuant to the Housing Act of 1949, as amended, that cannot be used by
a borrower to effectively carry out the objectives of the respective
loan program; for example, a dwelling that cannot be feasibly repaired
to meet the requirements for existing housing as described in 7 CFR
3550. It may contain a structure which would meet program standards,
however is so remotely located it would not serve as an adequate
residential unit or be an older house which is excessively expensive to
heat and/or maintain for a very-low or low-income homeowner.

[Nonprogram (NP) terms]{.underline}. Credit terms for SFH or MFH
property sales, offered for the convenience of the Government to
facilitate sales; more stringent than terms offered under Rural
Development\'s loan programs. Applicable when the purchaser does not
meet program eligibility requirements or when the property is classified
as nonprogram (NP). Loans made on NP terms are classified as NP loans
and are serviced accordingly. For property other than SFH and MFH, see
the definition of \"Ineligible terms.\"

## 3

## (Revision 5)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.103 (Con.)

[Organization property]{.underline}. Property for which the following
loans were made is considered organization property. Community Facility
(CF); Water and Waste Disposal (WWD); Association Recreation; Watershed
(WS); Resource Conservation and Development (RC&D); loans to
associations for Shift-in-Land Use (Grazing Association); loans to
associations for Irrigation and Drainage and other soil and water
conservation measures; loans to Indian Tribes and Tribal corporations;
Rural Rental Housing (RRH) to both groups and individuals; Rural
Cooperative Housing (RCH); Rural Housing Site (RHS); Labor Housing (LH)
to both groups and individuals; Business and Industry (B&I) to both
individuals and groups or corporations; Rural Development Loan Fund
(RDLF); Intermediary Relending Program (IRP); Nonprofit National
Corporations (NNC); and Economic Opportunity Cooperative (EOC).
Housing-type (RHS, RCH, RRH and LH) organization property is referred to
collectively in this subpart as Multiple Family Housing (MFH) property.
(Revised 8-25-88, SPECIAL PN.)

[Owner]{.underline}. (FP only) An individual or an entity which owned
the farm but who may or may not have been operating the farm at the time
the farm was taken into inventory. (Added 10-14-88, SPECIAL PN.)

[Participating broker]{.underline}. A duly licensed real estate broker
who has executed a listing agreement with the Agency.

[Program property]{.underline}. SFH and MFH inventory property that can
be used to effectively carry out the objectives of their respective loan
programs with financing through that program. Inventory property located
in an area where the designation has been changed from rural to nonrural
will be considered as if it were still in a rural area.

[Program terms]{.underline}. Credit terms for SFH or MFH property sales,
prescribed in program regulations for its various loan programs;
available only to persons/entities meeting eligibility requirements set
forth for the respective loan program. For property sales other than SFH
and MFH, see the definition of \"Eligible terms.\"

[Regular sale]{.underline}. Sale by Agency employees or real estate
brokers other than by sealed bid, auction or negotiation.

[Safe]{.underline}. No hazard exists on property which would likely
endanger the health or safety of occupants or users.

[Sealed bid sale]{.underline}. A public sale in which property is
offered to the highest bidder by prior written bid submitted in a sealed
envelope.

## 4

## (Revision 5) 

RD Instruction 1955-C

§ 1955.103 (Con.)

> [Servicing official]{.underline}. For loans to individuals, as defined
> in § 1955.53 of Subpart B of part 1955, the servicing official is the
> County Supervisor. For all other loans, excluding insured B&I, the
> servicing official is the District Director. For insured B&I loans,
> the servicing official is the State Director.
>
> [Socially disadvantaged applicant (SDA)]{.underline}. An applicant who
> is a member of a socially disadvantaged group whose members have been
> subjected to racial, ethnic, or gender prejudice because of their
> identity as a member of a group, without regard to their individual
> qualities. For entity SDA applicants, the majority interest in the
> entity must be held by socially disadvantaged individuals. The Agency
> has identified socially disadvantaged groups as Women, Blacks,
> American Indians, Alaskan Natives, Hispanics, Asians, and Pacific
> Islanders.\
> (Added 12-31-03, PN 368.)
>
> [Suitable property]{.underline}. For FSA inventory property, real
> property that can be used for agricultural purposes, including those
> farm properties that may be used as a start-up or add-on parcel of
> farmland. It would also include a residence or other off-farm site
> that could be the base for a farming operation. It would also include
> a residence or other off-farm site that could be used as a basis for a
> farming operation. For Agencies other than FSA, real property that
> could be used to carry out the objectives of the Agency's loan program
> with financing provided through that program. (Revised 08-20-97, PN
> 280.)
>
> [Surplus property]{.underline}. For FSA inventory property, real
> property that cannot be used for agricultural purposes including
> nonfarm properties. For other Agencies, property that cannot be used
> to carry out the objectives of financing available through the
> applicable loan program.\
> (Revised 08-20-97, PN 280.)

§ 1955.104 [Authorities and responsibilities]{.underline}.

> \(a\) [Redelegation of authority]{.underline}. Agency officials will
> redelegate authorities to the maximum extent possible, consistent with
> program objectives and available resources.

\(1\) Any authority in this subpart which is specifically provided to
the Administrator or to an Assistant Administrator may only be delegated
to a State Director. The State Director cannot redelegate such
authority.

## 4A

## (Revision 6)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.104(a) (Con.)

\(2\) Except as provided in paragraph (a)(l) of this section, the State
Director may redelegate, in writing, any authority delegated to the
State Director in this subpart, unless specifically excluded, to a
Program Chief, Program Specialist, or Property Management Specialist on
the State Office staff.

\(3\) The District Director may redelegate, in writing, any authority
delegated to the District Director in this subpart to an Assistant
District Director or District Loan Specialist. Authority of District
Directors in this subpart applies to Area Loan Specialists in Alaska and
the Director for the Western Pacific Territories.

\(4\) The County Supervisor may redelegate, in writing, any authority
delegated to the County Supervisor in this subpart to an Assistant
County Supervisor, GS-7 or above, who is determined by the County
Supervisor to be qualified. Authority of County Supervisors in this
subpart applies to Area Loan Specialists in Alaska, Island Directors in
Hawaii, the Director for the Western Pacific Territories, and Area
Supervisors in the Western Pacific Territories and American Samoa.

\(b\) [Responsibility]{.underline}.

\(1\) National Office program directors are responsible for reviewing
and providing guidance to State, District and County offices in
disposing of inventory property.

\(2\) The State Director is responsible for establishing an effective
program and insuring compliance with Agency regulations.

\(3\) District Directors are responsible for disposal actions for
programs under their supervision and for monitoring County Office
compliance with Agency regulations and State Supplements.

\(4\) County Supervisors are responsible for timely disposal of
inventory property for programs under their supervision.

\(c\) [Bid or offer acceptance]{.underline}. The servicing official has
the authority to offer for sale, accept and/or reject bids or offers for
inventory property regardless of amount. Any credit request, however,
must be approved by an approval official within his/her respective loan
approval authority as outlined in the applicable Exhibits of RD
Instruction\
1901-A, or FSA Handbook 1-FLP for FLP. (Revised 05-16-01, PN 332.)

## 5

## (Revision 4)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

CONSOLIDATED FARM AND RURAL DEVELOPMENT ACT (CONACT) REAL PROPERTY

§ 1955.105 [Real property affected (CONACT)]{.underline}. (Revised
10-14-88, SPECIAL PN.)

\(a\) [Loan types]{.underline}. Sections 1955.106 - 1955.109 of this
subpart prescribe procedures for the sale of inventory real property
which secured any of the following type of loans (referred to as CONACT
property in this subpart): Farm Ownership (FO); Recreation (RL); Soil
and Water (SW); Operating (OL); Emergency (EM); Economic Opportunity
(EO); Economic Emergency (EE); Softwood Timber (ST); Community Facility
(CF); Water and Waste Disposal (WWD); Resource Conservation and
Development (RC&D); Watershed (WS); Association Recreation; EOC; Rural
Renewal; Water Facility; Business and Industry (B&I); Rural Development
Loan Fund (RDLF); Intermediary Relending Program (IRP); Nonprofit
National Corporations (NNC); Irrigation and Drainage; Shift-in-Land Use
(Grazing Association); and loans to Indian Tribes and Tribal
Corporations. Homestead protection, as set forth in Subpart S of part
1951 of this chapter, is only applicable to Farmer Program loans as
defined in\
§ 1955.103 of this Subpart. (Revised 08-20-97, PN 280.)

\(b\) [Controlled substance conviction]{.underline}. In accordance with
the Food Security Act of 1985 (Public Law 99.198), after December 23,
1985, if an individual or any member, stockholder, partner, or joint
operator of an entity is convicted under Federal or State law of
planting, cultivating, growing, producing, harvesting, or storing a
controlled substance (see 21 CFR Part 1308, which is Exhibit C to
Subpart A of part 1941 of this chapter and is available in any Agency
office, for the definition of \"controlled substance\") prior to a
credit sale approval in any crop year, the individual or entity shall be
ineligible for a credit sale for the crop year in which the individual
or member, stockholder, partner, or joint operator of the entity was
convicted and the four succeeding crop years. Applicants will attest on
Form RD 410-1, \"Application for RD Services,\" that as individuals or
that its member, if an entity, have not been convicted of such crime
after December 23, 1985.

\(c\) [Effects of farm property sales on farm values]{.underline}. State
Directors will analyze farm real estate market conditions within the
geographic areas of their jurisdiction and determine whether or not the
sale of the FSA farm inventory properties will have a detrimental effect
on the value of farms within these areas. Such analysis will be carried
out in January of each year and as often throughout the year as
necessary to reflect changing farm real estate conditions. If the
analyses of farm real estate conditions indicate that such sales would
put downward pressure on farm real estate values in any area, all farm
properties within the area affected will be withheld from the market and
managed in accordance with the provisions of Subpart B of this Part
until such time that a subsequent analysis indicates otherwise. The
State Director will notify, in writing, the County Supervisor(s)
servicing those areas

## 6

## (Revision 4) 

RD Instruction 1955-C

§ 1955.105(c) (Con.)

that are restricted from selling farm inventory property. State
Directors in consultation with other lenders, real estate agents,
auctioneers, and others in the community will analyze all available
information such as:

\(1\) The number of farms and acres that FSA expects to acquire in
inventory.

\(2\) The number of farms and acres other lenders expect to acquire in
inventory.

\(3\) The number of farms and acres that FSA currently has in inventory.

\(4\) The number of farms and acres other lenders currently have in
inventory.

\(5\) The number of farms not included in paragraphs (c)(3)\
and (c)(4) of this section which are currently listed for sale. (Revised
05-07-92, SPECIAL PN.)

\(6\) Published real estate values and trend reports such as those
available from the Economic Research Service or professional appraisal
organizations.

\(d\) [Highly erodible land]{.underline}. If farm inventory property
contains \"highly erodible land\" as determined by the NRCS, the lease
must include conservation practices specified by the NRCS and approved
by FSA as a condition for leasing. Refer to § 1955.137(d) of this
subpart for implementation requirements. (Revised 08-20-97, PN 280.)

§ 1955.106 [Disposition of farm property]{.underline}. (Revised
08-20-97, PN 280.)

\(a\) [Rights of previous owner and notification]{.underline}. Before
property which secured a Farm Credit Programs loan is taken into
inventory, the county official will advise the borrower-owner of
Homestead Protection rights (see Subpart S of part 1951 of this
chapter). (Revised 08-20-97,\
PN 280.)

\(b\) [Racial and ethnic consideration]{.underline}. The County
Supervisor will make a special effort to insure that prospective
purchasers, who traditionally would not be expected to apply for farm
ownership loan assistance because of existing racial, ethnic, or gender
prejudice, are informed of the availability of the Socially
Disadvantaged Program. Emphasis will be placed on providing assistance
to such socially disadvantaged applicants in accordance with the
applicable sections of Subpart A of Part 1943 of this chapter. (Revised
11-03-93, SPECIAL PN.)

## 6A

## (Revision 4)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.106 (Con.)

\(c\) [Nonprogram (NP) borrowers]{.underline}. Non Program (NP)
borrowers are not eligible for Homestead Protection provisions as set
forth in Subpart S of part 1951 of this chapter. When it is determined
that all conditions of § 1951.558(b) of Subpart L of part 1951 of this
chapter have been met, loans for unauthorized assistance will be treated
as authorized loans and will be eligible for homestead protection.

§ 1955.107 [Sale of FSA property (CONACT)]{.underline}. (Revised
08-20-97, PN 280.)

FSA inventory property will be advertised for sale in accordance with
the provisions of this subpart. If a request is received from a Federal
or state agency for transfer of a property for conservation purposes,
the property should not be advertised until the request can be fully
considered. Real property will be managed in accordance with the
provisions of Subpart B of this part until sold.

\(a\) [Suitable Property]{.underline}. Not later than 15 days from the
date of acquisition, the Agency will advertise suitable property for
sale. For properties currently under lease, except leases to beginning
farmers and ranchers under § 1955.66(a)(2)(iii) of Subpart B of this
part, the property will be advertised for sale not later than 60 days
after the lease expires. There will be a preference given to beginning
farmers or ranchers. The advertisement will contain a provision to lease
the property to a beginning farmer or rancher for up to 18 months should
FSA credit assistance not be available at the time of sale. The first
advertisement will not be required to contain the sales price but it
should inform potential beginning farmers or ranchers applicants that
applications will be accepted pending completion of the advertisement
process. When possible, the sale of suitable CONACT property should be
handled by county officials. The date Form RD 1955-40, \"Notice of Real
Property for Sale,\" is posted is the date the property is offered for
sale. Farm property will be advertised for sale by publishing, as a
minimum, two weekly advertisements in at least two newspapers that are
widely circulated in the area in which the farm is located.
Consideration should also be given to advertising inventory properties
in major farm publications. Also, either Form RD 1955-40 or Form RD
1955-41, \"Notice of Sale,\" will be posted in a prominent place in the
County Office. When requested by the County official, State Office Farm
Credit Programs staff will assist in publicizing property for sale by
informing other County, District, or State Offices. Maximum publicity
should be given to the sale under guidance provided by\
§ 1955.146 of this Subpart and care should be taken to spell out
eligibility criteria. Tribal Councils or other recognized Indian

## 6B

## (Revision 4) 

RD Instruction 1955-C

§ 1955.107(a) (Con.)

governing bodies having jurisdiction over Indian reservations as defined
in § 1955.103 of this Subpart shall be responsible for notifying those
parties listed in § 1955.66(d)(2) of Subpart B of this part. See §
1955.106(b) for the Agency's responsibilities regarding racial and
ethnic consideration.

\(1\) [Price]{.underline}. Property will be advertised for sale for its
appraised market value based on the condition of the property at the
time it is made available for sale. The market value will be determined
by an appraisal made in accordance with FSA Handbook 1-FLP. Property
contaminated with hazardous waste will be appraised "as improved" which
will be used as the sale price for advertisement to beginning farmers or
ranchers. (Revised 04-19-00, PN 319.)

\(2\) [Selection of purchaser]{.underline}. After homestead protection
rights have expired, suitable farmland must be sold in the priority
outlined in this paragraph. When farm inventory property is larger than
family size, the property will be subdivided into suitable family size
farms pursuant to § 1955.140 of this Subpart.

> \(i\) [Sale to beginning farmers/ranchers]{.underline}. Not later than
> 135 days from the date of acquisition, FSA will sell suitable farm
> property, with a priority given to applicants who are classified as
> beginning farmers or ranchers, as defined in\
> § 1955.103, as of the time of sale. (Revised 09-10-03,\
> PN 363.)

\(ii\) [Random selection]{.underline}. The County official will first
determine whether applicants meet the eligibility requirements of a
beginning farmer or rancher. For applicants who are not determined to be
beginning farmers or ranchers, they may request that the State Executive
Director provide an expedited review and determination of whether the
applicant is a beginning farmer or rancher for the purpose of acquiring
inventory property. This review shall take place not later than 30 days
after denial of the applicant's application. The State Executive
Director's review decision shall be final and is not administratively
appealable. When there is more than one beginning farmer or rancher
applicant, the Agency will select by lot by placing the names in a
receptacle and drawing names sequentially. Drawn offers will be numbered
and those drawn after the first drawn name will be held as backups
pending sale to the successful applicant. Prospective purchasers of
suitable farmland and other interested parties may attend the random
selection drawing.

7

(Revision 9)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.107(a)(2) (Con.)

\(iii\) [Notification of applicants not selected to purchase suitable
farmland]{.underline}. When the Agency selects an applicant to purchase
suitable farmland, in accordance with this paragraph, all applicants not
selected will be notified in writing that they were not selected. The
random selection by lot is not appealable.

\(3\) [Credit sale procedure]{.underline}. Subject to the availability
of funds, credit sales to program applicants will be processed as
follows:

\(i\) Form RD 1955-45, \"Standard Sales Contract - Sale of Real Property
by the United States,\" will be used to document the offer and
acceptance for regular Agency sales.

\(ii\) The Agency will certify to the applicant\'s eligibility on Form
FSA 440-2, \"Eligibility Certification or Recommendation,\" in
accordance with program eligibility requirements when required by the
Agency regulation that applies to the appropriate loan program.

\(iii\) Upon request of the applicant, the interest rate charged by the
Agency will be the lower of the interest rates in effect at the time of
loan approval or closing. If the applicant does not indicate a choice,
the loan will be closed at the rate in effect at the time of loan
approval.

\(iv\) The loan limits for the requested type of assistance are
applicable to a credit sale to an eligible applicant.

\(v\) Title clearance and loan closing for a credit sale and any
subsequent loan to be closed simultaneously must be the same as for an
initial loan except that:

\(A\) Form RD 1955-49, \"Quitclaim Deed,\" or other form of nonwarranty
deed approved by the Office of the General Counsel (OGC) will be used.

## 8

(Revision 9)

RD Instruction 1955-C

§ 1955.107(a)(3)(v) (Con.)

\(B\) The buyer will pay attorney\'s fees and title insurance costs,
recording fees, and other customary fees unless they are included in a
subsequent loan. A subsequent loan may not be made for the primary
purpose of paying closing costs and fees.

\(vi\) When the transaction is closed, the responsible Agency official
will prepare and distribute Form RD 1955-50A, \"Advice of Inventory
Property Sold - Credit Sale,\" according to the Forms Manual Insert
(FMI).

\(vii\) Property sold on credit sale may not be used for any purpose
that will contribute to excessive erosion of highly erodible land or to
the conversion of wetlands to produce an agricultural commodity, as
further explained in Exhibit M of Subpart G of part 1940 of this
chapter. Additionally, all prospective buyers will be notified in
writing as a part of the property advertisement of the presence of
highly erodible land and wetlands on inventory property.

\(b\) [Surplus property and suitable property not sold to a beginning
farmer or rancher]{.underline}. Except where a lessee is exercising the
option to purchase under the Homestead Protection provision of subpart S
of part 1951 of this chapter, surplus property will be offered for
public sale by sealed bid or auction within 15 days from the date of
acquisition in accordance with § 1955.147 or § 1955.148. Suitable farm
property which has been advertised for sale to a beginning farmer or
rancher in accordance with paragraph (a) of this section, but has not
sold within 135 days from the date of acquisition will be offered for
public sale by sealed bid or auction to the highest bidder as provided
in paragraph (b)(1) of this section. If a request is received from a
Federal or State agency for transfer of a property for conservation
purposes, the property should not be advertised until the request can be
fully considered. On a credit sale, the property may not be used for any
purpose that will contribute to excessive erosion of highly erodible
land or to the conversion of wetlands to produce an agricultural
commodity, as further explained in Exhibit M of Subpart G of part 1940
of this chapter. All prospective buyers will be notified in writing as
part of the property advertisement of the presence of any highly
erodible land, converted wetlands, floodplains, wetlands, or other
special characteristics of the property that may limit its use or cause
an easement to be placed on the property. (Revised 09-10-03, PN 363.)

## 9

## (Revision 7)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.107(b) (Con.)

\(1\) [Advertising sale of property]{.underline}. When possible, the
sale of CONACT property should be handled by Authorized Agency Officials
and District Directors. FSA will advertise surplus property for sale by
sealed bid or auction within 15 days from the date of acquisition or,
for those suitable properties not sold to beginning farmers or ranchers
in accordance with this section, within 135 days of the date of
acquisition. The Agency will publish as a minimum, two weekly
advertisements in at least two newspapers that are widely circulated in
the area in which the property is located. Consideration should also be
given to advertising inventory properties in major farm publications.
Also, either Form RD 1955-40 or Form RD 1955-41 will be posted in a
prominent place in the County Office.

\(2\) [Sale by sealed bid or auction]{.underline}. Surplus real estate
must be offered for public sale by sealed bid or auction and must be
sold no later than 165 days from the date of acquisition to the highest
bidder. The State Executive Director will determine the method of sale.
Preference will be given to a cash offer which is at least \*percent of
the highest offer requiring credit. (\*Refer to Exhibit B of RD
Instruction 440.1 \[available in any Agency office\] for the current
percentage.) Equally acceptable sealed bid offers will be decided by
lot. (Revised 09-10-03, PN 363.)

\(3\) [Negotiated sale]{.underline}. If no acceptable bid is received
from a sealed bid or auction, the State Executive Director will sell
real property at the maximum price obtainable without further public
notice by negotiating with interested parties, including all previous
bidders. The rates and terms offered through negotiation will be within
the limitations of paragraph (a)(4) of this section. A sale made through
negotiation will be documented and accepted by the approval official on
Form RD 1955-46, \"Invitation, Bid and Acceptance-Sale of Real Property
by the United States,\" and will be accompanied with a bid deposit of
not less than ten percent (10%) of the negotiated price in the form of a
cashier\'s check, certified check, postal or bank money order, or bank
draft payable to FSA, plus any other conditions relating to acceptance.
Preference will be given to a cash offer which is at least
[\*]{.underline} percent of the highest offer requiring credit.
\[\*Refer to Exhibit B of RD Instruction 440.1 (available in any Agency
office) for the current percentage.\] Equally acceptable offers will be
decided by lot.

## 10

## (Revision 7) 

RD Instruction 1955-C

§ 1955.107(b)(3) (Con.)

\(i\) In negotiating a sale, offers may be solicited orally, by letter,
or advertised in local newspapers. The persons interested in purchasing
the property may be assembled for preliminary open negotiation.
Solicitation and advertisement will include a time and date by which
negotiation must have been completed.

\(ii\) If an offer represents the best price obtainable, the approval
official will accept it immediately; however, if a credit sale is
involved, this acceptance will be subject to confirmation of the
purchaser\'s repayment ability. If an acceptable offer is not negotiated
by the date set, a new date may be set for further negotiations. The
amount offered by one interested party will not be disclosed to any
other party except when negotiation is by preliminary open negotiation.
An offer stipulating that the offeror will purchase the property for a
specified sum above the best offer made will not be considered.

\(iii\) Advertising will be ordered in accordance with RD

Instruction 2024-A.

\(4\) [Rates and terms]{.underline}. Subject to the availability of
funds, rates and terms for Homestead Protection will be in accordance
with Subpart S of part 1951 of this chapter. Sales of suitable property
offered to program eligible applicants will be on rates and terms
provided in Subpart A of part 1943 of this chapter. Surplus property and
suitable property which has not been sold to program eligible applicants
will be offered for cash or on ineligible terms in accordance with
Subpart J of part 1951 of this chapter. A credit sale made on ineligible
terms will be closed at the interest rate in effect at the time the
credit sale was approved. After extensive sales efforts where no
acceptable offer has been received, the State Executive Director may
request the Administrator to permit offering surplus property for sale
on more favorable rates and terms; however, the terms may not be more
favorable than those legally permissible for eligible borrowers. Surplus
property will be offered for sale for cash or terms that will provide
the best net return for the Government. The term of financing extended
may not be longer than the period for which the property will serve as
adequate security. All credit sales on ineligible terms will be
identified as NP loans.

## 11

## (Revision 6)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.107 (Con.)

\(c\) [Sale through real estate brokers]{.underline}. The State
Executive Director may authorize the use of real estate brokers to sell
FSA CONACT real property at the market value in accordance with §
1955.130 of this Subpart only after the conditions outlined in this
paragraph have been met. The conditions are:

\(1\) The State Director has determined that the property cannot be sold
by FSA employees;

\(2\) The property has been advertised for sale by sealed bid or auction
and negotiation, and no acceptable bids or offers have been received;
and

\(3\) Any negotiations have been terminated.

§ 1955.108 [Sale of (CONACT) property other than FSA
property]{.underline}.\
(Revised 08-20-97, PN 280.)

Program officials will immediately contact the National Office whenever
they acquire real property to obtain further instructions on the time
frames and procedures for advertising and disposing of such property.

§ 1955.109 [Processing and closing (CONACT)]{.underline}. (Renumbered
10-14-88,

SPECIAL PN.)

\(a\) [Determining repayment ability and creditworthiness]{.underline}.
If a credit sale is involved, the applicant must furnish necessary
financial information to assist in determining repayment ability and
creditworthiness. Form FSA 431-2, \"Farm and Home Plan,\" should be used
for all eligible FSA applicants unless the applicant has furnished all
required information in another acceptable format. Information regarding
eligibility, planned development and total operations will be provided
the same as for the respective type of FSA loan. Purchasers requesting
credit on ineligible terms, except for C&BP, will be handled in
accordance with subpart J of part 1951 of this chapter. For C&BP,
information will be provided which is similar to an application
including financial information required for the respective loan program
to establish financial stability, creditworthiness, and repayment
ability. (Revised 11-12-93, SPECIAL PN.)

## 12

## (Revision 6) 

RD Instruction 1955-C

§1955.109 (Con.)

\(b\) [Credit sale approval authority for Farm Credit Programs
loans]{.underline}. County Supervisors, District Directors and State
Directors are authorized to approve or disapprove credit sales on
eligible terms in accordance with the respective loan approval
authorities in Exhibit C of subpart A of part 1901 of this chapter.
County Supervisors, District Directors, and State Directors are
authorized to approve or disapprove credit sales on ineligible terms in
accordance with the respective type of program approval authorities in
Exhibit E of subpart A of part 1901 of this chapter. (Revised 06-28-95,
PN 247.)

\(c\) [Form of payment]{.underline}. Payments at closing will be in the
form of cash, cashier\'s check, certified check, postal or bank money
order, or bank draft made payable to the Agency and handled in
accordance with subpart B of part 1951 of this chapter. (Revised
11-12-93, SPECIAL PN.)

\(d\) [Farm real property]{.underline}. Upon acceptance by the approval
official, the County Supervisor or District Director will provide the
closing agent with the necessary information to close the sale.\
(Renumbered 10-14-88, SPECIAL PN.)

\(e\) [Organization real property]{.underline}. Upon acceptance of the
bid or offer, the State Director will forward the original Form RD
1955-45 or RD 1955-46, the names and legal description to be placed on
the deed, the amount and terms of the note and mortgage, loan agreement
or resolution and other pertinent material to OGC requesting that they
provide the appropriate legal instruments and instructions for closing
the transaction. (Renumbered 10-14-88, SPECIAL PN.)

\(f\) [Earnest money]{.underline}. Earnest money, if any, will be used
to pay purchaser\'s closing costs with any balance of the costs being
paid by the purchaser. Any excess earnest money will be credited to the
purchase price or recognized as part of the purchaser\'s downpayment.
(Renumbered 10-14-88, SPECIAL PN.)

## 13

## (Revision 4)

(8-24-88) SPECIAL PN

RD Instruction 1955-C

§1955.109 (Con.)

\(g\) [Closing and reporting sales]{.underline}. Title clearance, loan
closing, and property insurance requirements for a credit sale will be
the same as for a program loan, except the property will be conveyed by
Form RD 1955-49, in accordance with §1955.141 (a) of this subpart. When
the transaction is closed, the County Supervisor or District Director
will prepare and submit Form RD 1955-50A in accordance with the FMI.
(Revised 06-28-95, PN 247.)

\(h\) [Classification]{.underline}. Credit sales on ineligible terms for
C&BP will be classified as NP loans and serviced accordingly.\
(Revised 11-12-93, SPECIAL PN.)

\(i\) [State supplements]{.underline}. A State supplement specifying
modifications to be made in note and mortgage instruments as pertinent
to a credit sale to an ineligible purchaser for C&BP will be issued with
the advice and approval of OGC. (Revised 11-12-93, SPECIAL PN.)

\(j\) [Form RD 1910-11, \"Applicant Certification, Federal Collection
Policies for Consumer or Commercial Debts]{.underline}.\" The County
Supervisor\
or District Director must review Form RD 1910-11, \"Applicant
Certification, Federal Collection Policies for Consumer or Commercial
Debts,\" with the applicant and the form must be signed by the
applicant. (Added 8-11-89, SPECIAL PN.)

§1955.110 \[Reserved\]

RURAL HOUSING (RH) REAL PROPERTY

## 14

## (Revision 4) 

RD Instruction 1955-C

§1955.111 [Sale of real estate for RH purposes (housing)]{.underline}.

Sections 1955.112 - 1955.120 of this subpart pertain to the sale of
acquired property pursuant to the Housing Act of 1949, as amended, (RH
property). Single family units (generally which secured loans made under
Section 502 or 504 of the Housing Act of 1949, as amended) are referred
to as SFH property. All other property is referred to as MFH property.
Notwithstanding the provisions of §1955.112 - 1955.118 of this subpart,
§1955.119 is the governing section for the sale of SFH inventory
property to a public body or nonprofit organization to use for
transitional housing for the homeless. (Revised 03-08-90, SPECIAL PN.)

§1955.112 [Method of sale (housing)]{.underline}.

\(a\) [Sales by Rural Development]{.underline}. Sales customarily will
be made by Rural Development personnel in accordance with §1955.114 and
§1955.115 of this subpart (as appropriate) when staffing and workload
permit and inventory levels do not exceed those outlined in paragraph
(b) of this section. Adequate and timely advertising in accordance with
§1955.146 of this subpart is of utmost importance when this method is
used. No earnest money will be collected in connection with sales by
Rural Development. For MFH, this method will always be used unless
another method is authorized by the Assistant Administrator, Housing.

\(b\) [Real estate brokers]{.underline}. The County Office will utilize
the services of real estate brokers for regular sales when there are
five or more properties in inventory at any one time during the calendar
year. When real estate brokers are used, first consideration will be
given to utilizing such services under an exclusive broker contract as
provided for in §1955.130 of this subpart. Only when it is determined
that an exclusive broker contract is not practicable, will the services
of real estate brokers under an open listing agreement be utilized. The
use of real estate brokers in offices having less than five properties
in inventory at any time during the calendar year is optional provided
staffing and workload permit diligent and timely sales by Rural
Development. When broker services for SFH are utilized, the Rural
Development office will not conduct direct sales, but will refer
inquiries to the broker or list of participating brokers. However, if
Rural Development has been approached by a potential buyer desiring to
purchase a specific property and a sales contract has been accepted, the
property will not be listed for sale with real estate brokers. Earnest
money held by real estate brokers will be used to pay the purchaser\'s
closing costs with any balance of the costs to be paid by the purchaser.
Any required earnest money deposit is exclusive of any required credit
report fee. Brokers may only be used for MFH with authorization of the
Assistant Administrator, Housing.

## 15

## (Revision 3)

(8-24-88) SPECIAL PN

RD Instruction 1955-C

§1955.112 (Con.)

\(c\) [Sealed bid or auction]{.underline}. The use of sealed bids or
auctions is an effective method by which to sell inventory property. If
the State Director determines that NP SFH property has been given
adequate market exposure and that diligent sales efforts have not
produced buyers, or under unusual circumstances as outlined in
§1955.115(a)(1) of this subpart, he/she will authorize sale by sealed
bid or auction

unless additional sales methods appear more prudent. Program SFH
property will be sold by regular sale [only]{.underline}, unless the
Assistant Administrator, Housing, authorizes sale by sealed bid or
auction. The State Director will request such authorization when all
reasonable marketing efforts fail to produce buyers and the conditions
of §1955.114(a)(6) of this subpart have been met. The case file,
including documentation of all marketing efforts, will be forwarded to
the Assistant Administrator, Housing, ATTN: Single Family Housing
Servicing and Property Management (SFH/SPM) Division, to request
authority to sell program property by sealed bid or auction. The
decision to utilize a sealed bid or auction must be carefully weighed
when the property is located in a subdivision, since the resultant sale
may have an adverse effect on surrounding property values. Detailed
guidance for conducting sealed bid sales is provided in §1955.147 of
this subpart and for conducting auction sales §1955.131 and 1955.148 of
this subpart. (Revised 2-15-89, PN 102)

§1955.113 [Price (housing)]{.underline}.

Real property will be offered or listed for its present market value, as
adjusted by any administrative price reductions provided for in this
section. Market value will be based upon the condition of the property
at the time it is made available for sale. However, when a Section 515
RRH credit sale is being made to a nonprofit organization or public body
to utilize former single family dwellings as a rental or cooperative
project for very low-income residents, the price will be the lesser of
the Government\'s investment or market value, less administrative price
reductions, if any. Market value for multi-family housing projects will
be determined through an appraisal conducted in accordance with Subpart
B of Part 1922 of this chapter. Multi-family housing appraisals
conducted shall reflect the impact of any restrictive-use provisions
attached to the project as part of the credit sale. (Revised 08-20-93,
SPECIAL PN.)

\(a\) [SFH price reduction]{.underline}. SFH property will be appraised
at any time additional marker data indicates this action is warranted.
If SFH inventory has not sold after being actively marketed, the price
will be administratively reduced. An administrative price reduction will
be made without changing the SFH appraisal. For ease in computing

## 16

## (Revision 3) 

RD Instruction 1955-C

§1955.113 (a) (Con.)

dates for administrative price reductions, each month is assumed to have
30 days. The following schedule of administrative price reductions will
be followed:

\(1\) [Program property]{.underline}. If program property has not sold
after being actively marketed at the current appraised value for 45 days
during which time program applicants have exclusive rights to purchase
the property, plus an additional 30 days to any offeror, the price will
be administratively reduced by 10 percent of the appraised value. During
the first 45 days after the price reduction, the property will be
actively marketed with program applicants having exclusive rights to
purchase the property, and at the expiration of this 45-day period, the
property may be sold to any offeror. If at the end of this 75-day period
the property remains unsold, a second price reduction of 10 percent of
the appraised value will be made. During the first 45 days after the

## 16A

## (Added 08-20-93, SPECIAL PN)

(8-24-88) SPECIAL PN

§1955.113(a)(1)(Con.) RD Instruction 1955-C

second price reduction, the property will be actively marketed with
program applicants having exclusive rights to purchase the property, and
at the expiration of this 45 day period, the property may be sold to any
offeror. If the property does not sell within 75 days of the second
price reduction, further guidance is provided in §1955.114(a)(6) and
Exhibit D (available in any Rural Development office) of this subpart.
(Revised 2-15-89, PN 102)

\(2\) [Nonprogram (NP) property]{.underline}. If NP property has not
sold after being actively marketed for 45 days, the price will be
administratively reduced by 10 percent of the appraised value. If the
property remains unsold after an additional 45 day period of active
marketing, one further price reduction of 10 percent of the appraised
value will be made. If the property does not sell within 45 days of the
second price reduction, further guidance is provided in §1955.115(a)(1)
and Exhibit D (available in any Rural Development office) of this
subpart.

\(b\) [MFH price reduction]{.underline}. For multiple-family property,
the sale price will only be reduced to the extent that the market value
has decreased as shown in a current market appraisal. The District
Director will not reduce the price without the prior written approval of
the State Director. The State Director must request National Office
authorization on reductions in price for multiple-family property if the
inventory value at the time of acquisition exceeded the State
Director\'s loan approval authority.

§1955.114 [Sales steps for program property (housing)]{.underline}.

Program property will be sold by regular sale unless the Assistant
Administrator, Housing, authorizes another method. If the State Director
determines that program property has been given adequate market exposure
and that diligent sales efforts including the use of real estate brokers
has not produced purchasers, the State Director may request the
Assistant Administrator, Housing, to authorize sale by sealed bid or
public auction as specified in §1955.112(c) of this subpart.

\(a\) [Single family housing (SFH)]{.underline}. Sale prices will be
established in accordance with §1955.113 of this subpart. The County
Supervisor will either offer the property or list it with real estate
brokers for regular sale under the provisions of §1955.112 of this
subpart. See Exhibit D of this subpart (available in any Rural
Development office) which outlines chronologically the sales steps for
program property.

\(1\) The following provisions apply to all offers to purchase SFH
inventory property:

\(i\) Program property will be available for purchase only by program
applicants for the first 45 days from the date of

## 17

## (Revision 2)

(8-24-88) SPECIAL PN

RD Instruction 1955-C

§1955.114(a)(1)(i)(Con.)

the initial offering or listing, and for the first 45 days following the
date of any reduction in price. During these 45-day period(s), offers
from others may be received and held until the first business day
following the 45-day period (the 46th day) when any such offer(s) will
be considered as received on the 46th day along with offers received on
that same (46th) day. After the expiration of each 45 day exclusive
period for program applicants, program property may be purchased by
offerors requesting credit on program terms, nonprogram (NP) terms or
for cash in the order of priority set forth in paragraph (a)(3) of this
section.

\(ii\) In regular sales, an acceptable offer must be for at least the
sale price. No offer for less than the sale price will be considered,
accepted or held. Offers will be considered as acceptable or
unacceptable independent of any accompanying credit request (on program
or NP terms).

\(iii\) All offers will be date-stamped when received. Selection of
equally acceptable offers, considering offers in the category order
outlined in paragraph (a)(3) of this section, received on the same
business day will be made by lot by placing the names in a receptacle
and drawing names sequentially. Drawn offers will be numbered and those
drawn after the first drawn offer will be held as back-up offers pending
sale to the successful offeror, unless the offeror has specifically
noted on the offer that it may not be held as a back-up offer.

\(iv\) An offer may be submitted any time after the effective date the
property is available for sale or any price reduction; however, it is
not considered until five business days after the effective date. An
offer received during the five business day period is considered on the
6th day, at the same time as any offer received on the 6th day. (Revised
03-08-90,\
SPECIAL PN.)

\(v\) If an offer subject to Rural Development financing is accepted,
and the offeror\'s credit request is later denied, the next offer (if
any) will be accepted regardless of whether the rejected applicant
appeals the adverse decision (NP applicants do not receive appeal
rights). In cases involving program property,

## 18

## (Revision 2) 

RD Instruction 1955-C

§ 1955.114(a)(1)(v) (Con.)

if no back-up offers are on hand, the property will be
reoffered/relisted for sale utilizing the balance of any outstanding
retention period. Property will not be held off the market pending the
outcome of an appeal.

\(2\) [Effective date and method of offering]{.underline}. When ready
for sale, each property will be offered for sale by use of Form RD
1955-43 unless Rural Development has on hand a signed offer from a
program applicant to purchase a specific program property or an offer
from any offeror to purchase a specific NP property. The date the form
is posted or mailed to real estate brokers is the effective date the
offer for sale has begun. Listings will provide for sales on program and
NP terms, as appropriate.

\(3\) [Priority of offers]{.underline}. For program properties,
acceptable offers received after the 45-day retention period specified
in paragraph (a)(1)(i) of this section have priority in the order given
in paragraphs (a)(3)(i), (ii), (iii) and (iv) of this section. For NP
properties, acceptable offers have priority in the order given in
paragraphs (a)(3)(ii), (iii) and (iv) of this subparagraph. Program
applicants may purchase NP property, however, credit may only be
extended on NP terms.

\(i\) Offers with requests for credit on program terms. An offer from an
applicant requesting credit on program terms in excess of the sale price
will be considered as equally acceptable with other acceptable offers
from program applicants and will be sold for the sale price.

\(ii\) Cash offers, in descending order from highest to lowest, provided
the cash offer is higher than any other offer which falls into the
parameters of paragraph (a)(3)(iii) of this section multiplied by the
current cash preference percentage listed in Exhibit B of RD Instruction
440.1 (available in any Rural Development office). (Revised 08-20-93,
SPECIAL PN.)

\(iii\) Offers with requests for credit on NP terms in descending order
from highest to lowest, for more than the sale price. An offer with a
request for credit in excess of the market value of the property will
not be accepted. If an offer of this type is received, the offeror will
be given the opportunity to reduce the credit request to the market
value (or lower) with no change to be made in the offered price.

## 19

## (Revision 3)

(8-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.114(a)(3) (Con.)

\(iv\) Offers with requests for credit on NP terms for the sale price.

\(4\) [Back-up offers and notification to offerors]{.underline}. Back-up
offers will be taken in accordance with paragraph (a)(1)(iii) of this
section. County offices utilizing the services of real estate brokers
will advise the brokers of changes in the status of the property. County
offices not utilizing real estate brokers will advise offerors of
changes in the status of the property utilizing Exhibit E of this
subpart (available in any Rural Development Office) or similar format.
Use of Exhibit E is optional in offices utilizing real estate brokers.

\(5\) [Finalizing sales]{.underline}. Credit sales on program terms will
be made in accordance with § 1955.117 of this subpart and 7 CFR part
3550. Cash sales will be handled in accordance with § 1955.118 of this
subpart and credit sales on NP terms will be made in accordance with
subpart J of part 1951 of this chapter. (Revised 01-23-03,\
SPECIAL PN.)

\(6\) [Unsold property]{.underline}. If program property remains unsold
after eight months of active marketing, the case file, with
documentation of all marketing efforts, will be forwarded to the State
Office for review with a recommendation of future sales efforts. The
State Director will determine whether a request should be made to the
Assistant Administrator, Housing, to sell the property by sealed bid or
auction, or whether additional guidance such as, but not limited to
advertising, reappraisal, offering a special effort sales bonus, or
20-year amortization factor (with balloon after 10 years) on NP
financing may facilitate a sale.

\(b\) [Multiple-family housing]{.underline}. The sale price will be
established in accordance with § 1955.113 of this subpart. Notification
of known interested prospective offerors and advertising should be
handled as set forth in § 1955.146 of this subpart. The sale information
will include a sale price, any restrictive-use provisions the project
will be subject to and made part of the title, a date/time/location when
offers will be drawn, and require all offerors to submit an application
package comparable to that required by the respective loan program which
will be reviewed by the State Director, or designee. The sale
date/time/location will be established by the District Director and will
allow adequate time for advertising and review of applications to
determine eligibility in accordance with MFH program requirements.
Offerors whose applications are rejected by Rural Development will be
notified in writing by the approval official, and for

## 20

## (Revision 3) 

RD Instruction 1955-C

§ 1955.114(b) (Con.)

program applicants, given appeal rights in accordance with Subpart B of
Part 1900 of this chapter. If an application is rejected, the sale will
continue regardless of whether the rejected applicant appeals the
adverse decision. Property will not be held pending the outcome of an
appeal. An offeror may withdraw an offer prior to the sale date, but not
on the sale date. All offers from applicants determined eligible for the
type loan being offered will be considered. The District Director, or
delegate, and one other Rural Development employee will conduct the
drawing at which time the public may be present. Offers will be placed
in a receptacle and drawn sequentially. Drawn offers will be numbered
and those drawn after the first drawn will be held as back-up offers,
unless the offeror has indicated that the offer may not be held as a
back-up. Award will be made to the first offer drawn provided the offer
is acceptable as to the terms and conditions set forth in the sale
notice. The successful offeror will be notified immediately in writing
by the approval official, return receipt requested, that the successful
offeror\'s offer has been accepted even if the successful offeror was
present at the sale. The remaining offerors will each be notified by
letter, return receipt requested, that their offer was not successful,
but will be held as a back-up offer. The selection of the offeror was by
lot and is therefore not appealable. If an unsuccessful offeror was not
present at the sale and requests the name of the successful offeror, the
name may be released. If the MFH property has been listed with real
estate brokers after receiving authorization from the Assistant
Administrator, Housing, Form RD 1955-40, or another appropriate form
designated for MFH property, will be used and the property sold to the
first eligible program applicant. Any other method of sale must receive
prior written authorization from the Assistant Administrator, Housing.
Cash sales of program property will remain subject to restrictive-use
provisions determined needed and included in the advertisement. The deed
will contain the applicable restrictive-use provisons. Tenants and
prospective tenants will receive the applicable protections for the
specific restrictive-use provision contained in 7 CFR part 3560, Subpart
N. (Revised 02-24-05, SPECIAL PN.)

\(c\) [Single family inventory converted to MFH.]{.underline} Written
offers by nonprofit organizations, public bodies or for profit entities,
which have good records of providing low-income housing under Section
515 will be considered by Rural Development for the purchase of multiple
SFH units for conversion to MFH. Section 514 credit sale mortgages may
contain repayment terms up to 33 years and Section 515 credit sale
mortgage terms may be up to 50 years. (Revised 07-21-93, PN 209.)

\(1\) The price provisions of {1955.113 and the processing provisions
for MFH in {1955.117 of this subpart apply to such a conversion.

## 21

## (Revision 4)

(8-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.114(c) (Con.)

\(2\) The provisions of § 1955.130 of this subpart pertaining to real
estate brokers apply, as applicable, and a commission will be due in the
normal manner on units which were listed with the broker(s).

\(3\) Prior approval of the National Office is required before issuance
of Form AD-622, \"Notice of Preapplication Review Action.\" A
preapplication with documentation as required by the Agency, along with
the State Director\'s recommendation, will be forwarded to the National
Office, Attention: Assistant Administrator, Housing, for a determination
and further guidance. (Revised 02-24-05, SPECIAL PN.)

\(4\) A credit sale for this purpose will be made according to the
provisions of 7 CFR part 3560, as modified by § 1955.117 of this
subpart, except the units need not be contiguous, but they must be
located in close enough proximity so that management costs are not
increased nor management capabilities diminished because of distance.
(Revised 02-24-05, SPECIAL PN.)

\(5\) An additional loan may be made simultaneously with the credit
sale, or later, only when the property involved meets the requirements
of 7 CFR part 3560, subpart K. (Revised 02-24-05, SPECIAL PN.)

\(d\) [CONACT residential property suitable for the SFH
program]{.underline}. When a single family house acquired under the
CONACT is determined to be suited for the SFH program, it may be offered
for sale as a SFH unit as though it had been acquired under the SFH
program. It may, however, be sold in this manner to a program RH
applicant on program terms only \-- not for cash or on NP terms. When a
house is offered for sale under this paragraph, the listing notices and
any advertising (whether being sold by Rural Development or through real
estate brokers) must state this restriction.

§ 1955.115 [Sales steps for nonprogram (NP) property
(housing)]{.underline}.

The appropriate Rural Development Office will take the following steps
after repairs, if economically feasible, are completed. The appraisal
will be updated to reflect changes in market conditions, repairs and
improvements, if any. Form RD 1955-43 for SFH and 1955-40 for MFH will
be completed to offer the property for sale. The advertising
requirements and deed restrictions in § 1955.116 of this subpart apply
if the property does not meet Rural Development DSS standards.

## 22

## (Revision 4) 

RD Instruction 1955-C

§ 1955.115 (Con.)

\(a\) [Single Family Housing]{.underline}. Sales steps will be the same
as for program properties as provided in § 1955.114 (a) of this subpart,
except that sales must be for cash in accordance with § 1951.118 or
credit on NP terms as provided in Subpart J of part 1951 of this
chapter. See Exhibit D of this subpart (available in any Rural
Development office) which outlines chronologically the sales steps for
NP properties. (Revised 11-12-93, SPECIAL PN.)

\(1\) [Sale by sealed bid or auction]{.underline}. If a NP property has
not sold within 150 days after being offered for sale, the inventory
case file with documentation of marketing efforts will be submitted to
the State Director. The State Director will authorize sale by sealed bid
or auction in accordance with § 1955.112(c) of this subpart unless
additional sales methods appear more prudent. Use of the sealed bid or
auction method may be considered as an initial sales effort under
special or unusual circumstances such as, but not limited to, structures
which have been substantially destroyed by fire or other causes.

\(2\) [Sale as chattel]{.underline}. If efforts to sell NP property by
sealed bid or auction prove unsuccessful, the structure(s) may be sold
as chattel (for chattel or salvage value, as appropriate) when
authorized by the State Director. When the structure is to be sold as
chattel (exclusive of land) further guidance is provided in\
§§ 1955.121, 1955.122 and 1955.141(b) of this subpart. If no offer is
received, the structure(s) may be demolished and removed from the site
and then the site offered for sale. If this method is utilized, Rural
Development will attempt to have the structure removed in exchange for
the salvageable materials by contract, otherwise, will solicit for
contracts to have the structure removed in accordance with RD
Instruction 2024-A (available in any Rural Development office).

\(3\) [Sale of vacant land]{.underline}. When Rural Development has
vacant land in inventory which was security for an SFH loan, the land
will be sold in accordance with this subparagraph. When the lot meets
the requirements of 7 CFR part 3550, and a program applicant desires to
purchase the lot and construct a dwelling, a credit sale will not be
made. Instead, one Section 502 loan will be made which will include
funds for the purchase of the lot and construction of a dwelling.
Otherwise, the lot will be sold for cash or on NP terms with a loan not
to exceed ten years in term and amortization. (Revised\
01-23-03, SPECIAL PN.)

\(b\) [Multiple family housing]{.underline}. Sales steps will be the
same as for program MFH property as provided in § 1955.114(b) of this
subpart except that sales must be for cash or on NP terms as set forth
in

## 23

## (Revision 4)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.115(b) (Con.)

§ 1955.118 of this subpart. Additionally, if cash offers are received,
they will be given first preference by drawing from the cash offers
only. If the State Director determines an auction sale should be used to
sell NP MFH property, authority to use that method of sale must be
requested from the Assistant Administrator, Housing. Inventory files,
including information on the acquisition, marketing efforts made,
management of the property, other pertinent information, a memorandum
covering the facts of the case, and recommendations of the State
Director must be submitted for review. If the housing is sold out of the
Rural Development program as NP property, the closing of the sale may
not take place until tenants have received all notifications and
benefits afforded to tenants in prepaying projects in accordance with\
7 CFR part 3560, Subpart N. (Revised 02-24-05, SPECIAL PN.)

§ 1955.116 [Requirements for sale of property not meeting decent, safe
and sanitary (DSS) standards (housing)]{.underline}.

For real property (exclusive of improvements) which is unsafe, refer to\
§ 1955.137 of this subpart for further guidance. For all other housing
inventory property which does not meet decent, safe and sanitary (DSS)
standards, the provisions of this section apply.

\(a\) [Notices and advertising]{.underline}. If the inventory property
has a single family dwelling or MFH unit thereon which does not meet DSS
standards as defined in § 1955.103 of this subpart, but which could meet
such standards through the repair or renovation activities of the future
owner, any \"Notice of Real Property For Sale,\" \"Notice of Sale,\" or
other advertisement used in conjunction with advertising the property
for sale must include the following language which is contained in Form
RD 1955-44, \"Notice of Residential Occupancy Restriction\":

\"This property contains a dwelling unit or units which Rural
Development has deemed to be inadequate for residential occupancy. The
Quitclaim Deed by which this property will be conveyed will contain a
covenant restricting the residential unit(s) on the property from being
used for residential occupancy until the dwelling unit(s) is repaired,
renovated or razed. This restriction is imposed pursuant to section
510(e) of the Housing Act of 1949, as amended, 42 U.S.C. 1480. The
property must be repaired and/or renovated as follows: [\*
.]{.underline}

\*For advertisements, the sentence preceding the asterisk may be deleted
and replaced with the following, or similar sentence: \"Contact Rural
Development (or any real estate broker/name of exclusive broker) for a
list of items which must be

## 24

## (Revision 4) 

§1955.116 (a) (Con.) RD Instruction 1955-C

repaired/renovated.\" For notices other than advertising, insert those
items which are necessary to make the dwelling unit(s) meet DSS
standards. Examples are:

\- Replace flooring and floor joists in kitchen and bathroom.

\- Drill new well to provide for an adequate and potable water supply.

\- Hook-up to community water and sewage system now being installed.

\- Provide a functionally adequate, safe and operable
[\*]{.underline}\_\_\_ system. \*Insert heating, plumbing, electrical
and/or sewage disposal, etc., as appropriate.

\- Install [\*]{.underline}. \*Insert new roof, foundation, sump pump,
bathroom fixtures, etc., as appropriate.

\- Install R-[\*]{.underline}\_insulation in basement walls or ceiling,
R-[\*]{.underline}\_insulation in attic, and storm windows/doors
throughout. \*Insert appropriate R-Values to meet Thermal Performance
Standards.

\(b\) [Sale agreements]{.underline}. If a housing structure in inventory
does not meet DSS standards, Form RD 1955-44 must be attached to Forms
RD 1955-45 or RD 1955-46, as appropriate, to provide notification of the
deed restriction and required repairs/renovations before the dwelling
can be used for residential purposes.

\(c\) [Quitclaim Deed]{.underline}. The following, the original of Form
RD 1955-44, or similar restrictive clause adapted for use in an
individual State pursuant to a State Supplement approved by OGC must be
added to the Quitclaim Deed for properties which do not meet DSS
standards at the time of sale but which could through the
repair/renovation activities of the future owner:

\"Pursuant to section 510(e) of the Housing Act of 1949, as amended, 42
U.S.C. 1480(e), the purchaser (\"Grantee\" herein) of the
above-described real property (the \"subject property\" herein)
covenants and agrees with the United States acting by and through
Farmers Home Administration (the \"Grantor\" herein) that the dwelling
unit(s) located on the subject property as of the date of this Quitclaim
Deed will not be occupied or used for residential purposes until the
item(s) listed at the end of this

## 25

## (Revision 2)

(8-24-88) SPECIAL PN

RD Instruction 1955-C

§1955.116 (c) (Con.)

paragraph have been accomplished. This covenant shall be binding on
Grantee and Grantee\'s heirs, assigns and successors and will be
construed as both a covenant running with the subject property and as
equitable servitude. This covenant will be enforceable by the United
States in any court of competent jurisdiction. When the existing
dwelling unit(s) on the subject property complies with the
aforementioned standards of the Farmers Home Administration or the
unit(s) has been completely razed, upon application to the Farmers Home
Administration in accordance with its regulations, the subject property
may be released from the effect of this covenant and the covenant will
thereafter be of no further force or effect. The property must be
repaired and/or renovated as follows:[\*]{.underline}\_.\" \*Insert the
same items referenced in the listing notice(s) and sale agreement which
are necessary to make the dwelling unit(s) meet DSS standards.

\(d\) [Release of restrictive covenant]{.underline}. Upon request of the
property owner for a release of the restrictive covenant, Rural
Development will inspect the property to ensure that the
repairs/renovations outlined in the restrictive covenant have been
properly completed or the structure(s) razed. A State Supplement
outlining the procedure for releasing the restrictive covenant will be
issued with the advice of OGC.

{1955.117 [Processing credit sales on program terms
(housing)]{.underline}.

The following provisions apply to all credit sales on program terms:

\(a\) [Offers]{.underline}. Form RD 1955-45 will be used to document the
offer and acceptance for regular Rural Development sales. The contract
is accepted prior to processing Form RD 410-4, \"Application for Rural
Housing Assistance (Non Farm Tract),\" for SFH property with the
provision that acceptance is subject to program approval. MFH property
sales require an application package comparable to that submitted for
the respective loan program application.

\(b\) [Processing]{.underline}. The Rural Development regulations
pertaining to the type of credit being extended will be followed in
making credit sales on program terms except as modified by the
provisions of this section. All MFH credit sales may be made for up to
100 percent of the current market value of the security, less any prior
lien. However, if a profit or limited profit applicant desires to earn a
return, the applicant will be required to contribute at least 3 percent
of the purchase price as a cash downpayment. All credit sales of RRH,
RCH, and LH properties will be subject to prepayment and restrictive-use
provisions specified by the respective program requirements. (Revised
08-20-93, SPECIAL PN.)

## 26

## (Revision 2) 

RD Instruction 1955-C

§ 1955.117 (Con.)

\(c\) [Approval]{.underline}. Forms RD 1940-1 or RD 3560-51, as
appropriate, will be used to approve a credit sale even though no
obligation of funds is required. (Revised 02-24-05, SPECIAL PN.)

\(d\) [Downpayment]{.underline}. When a downpayment is made, it will be
collected at closing, identified by property identification number,
purchaser\'s name and case number (and project number for MFH sales) and
remitted in accordance with RD Instruction 1951-B (available in any
Rural Development office).

\(e\) [Interest rate]{.underline}. Upon request of the applicant, the
interest rate charged by Rural Development will be the lower of the
interest rate in effect at the time of loan approval or closing. If the
applicant does not indicate a choice, the loan will be closed at the
rate in effect at the time of loan approval.

\(f\) [Closing costs]{.underline}. MFH purchasers will pay closing costs
from their own funds. Where necessary, SFH purchasers who quality may be
made a subsequent loan to pay closing costs in an amount not to exceed\
1 percent of the sale price of the dwelling. Any closing costs which are
legally or customarily paid by the seller will be paid by Rural
Development and charged to the inventory account as a nonrecoverable
cost item. (Revised 2-15-89, PN 102.)

\(g\) [Closing sale]{.underline}. Title clearance, loan closing and
property insurance requirements for a credit sale, and any loan closed
simultaneously with the credit sale, are the same as for a program loan
of the same type except:

\(1\) The property will be conveyed in accordance with §1955.141(a) of
this subpart.

\(2\) Earnest money, if any, will be used to pay purchaser\'s closing
costs with any balance of closing costs being paid from the purchaser\'s
personal funds except as provided in paragraph (f) of this section. For
SFH credit sales and MFH credit sales to nonprofit organizations or
public bodies, any excess deposit will be refunded to the purchaser. For
MFH credit sales to profit or limited profit buyers, any excess earnest
money deposit will be credited to the purchase price and recognized as a
part of the purchaser\'s initial investment.

## 26A

## (Revision 2)

(8-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.117(g) (Con.)

\(3\) The County Supervisor or District Director will provide the
closing agent with the necessary information for closing the sale. The
assistance of OGC will be requested to provide closing instructions in
exceptional or complex cases and for all MFH sales.

\(h\) [Reporting]{.underline}. After the sale is closed, it will be
reported according to {1955.142 of this subpart.

§ 1955.118 [Processing cash sales or MFH credit sales on NP
terms]{.underline}.\
(Revised 11-12-93, SPECIAL PN.)

\(a\) [Cash sales]{.underline}. Cash sales will be closed by the
servicing official collecting the purchase price (less any earnest money
deposit or bid deposit) and delivering the deed to the purchaser.
Proceeds will be remitted in accordance with Subparts B and K of Part
1951 of this chapter. (Revised 11-12-93, SPECIAL PN.)

## 26B

## (Revision 2) 

RD Instruction 1955-C

§ 1955.118 (Con.)

\(b\) [Credit sales]{.underline}. The following provisions apply to MFH
credit sales on NP terms:

\(1\) [Offers]{.underline}. Forms RD 1955-45 or RD 1955-46, as
appropriate, will be used to document the offer and acceptance. Contract
acceptance is made prior to processing a request for credit on NP terms.

\(2\) [Processing]{.underline}. Purchasers requesting credit on NP terms
will be required to submit documentation to establish financial
stability, repayment ability and creditworthiness. Standard forms used
to process program applications may be utilized or comparable
documentation may be accepted from the purchaser with the servicing
official having the discretion to determine what information is required
to support loan approval for the type property involved. Individual
credit reports will be ordered for each individual applicant and each
principal within an applicant entity in accordance with Subpart B of
Part 1910 of this chapter. Commercial credit reports will be ordered for
profit corporations and partnerships, and organizations with a
substantial interest in the applicant entity in accordance with Subpart
C of Part 1910 of this chapter. (Revised 11-12-93, SPECIAL PN.)

\(3\) [Approval]{.underline}. Form RD 3560-51, will be used to approve a
credit sale even though no obligation of funds is involved. Special
instructions on the FMI pertaining to NP credit sales will be followed.
(Revised 02-24-05, SPECIAL PN.)

\(4\) [Downpayment]{.underline}. A downpayment of not less than 10
percent of the purchase price is required at closing and will be
remitted by the servicing official according to Subparts B and K of Part
1951 of this chapter. (Revised 11-12-93, SPECIAL PN.)

\(5\) [Interest rate]{.underline}. The Section 515 RRH interest rate
plus\
1/2 percent will be charged on all types of housing credit sales, except
SFH. Refer to Exhibit B of RD Instruction 440.1 (available in any Rural
Development Office) for interest rates. Loans made on NP terms will be
closed at the interest rate which was in effect at the time the loan was
approved.

(Revised 11-12-93, SPECIAL PN.)

## 27

## (Revision 4)

(8-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.118(b) (Con.)

\(6\) [Term of note]{.underline}. The note amount will be amortized over
a period not to exceed 10 years. If the State Director determines more
favorable terms are necessary to facilitate the sale, the note amount
may be amortized using a 30-year factor with payment in full (balloon
payment) due not later than 10 years from the date of closing. In no
case will the term be longer than the period for which the property will
serve as adequate security.\
(Revised 11-12-93, SPECIAL PN.)

\(7\) [Modification of security instruments]{.underline}. If applicable
to the type property being sold, modification or security instruments
may be made. On the promissory note and/or security instrument (mortgage
or deed of trust) any covenants relating to graduation to other credit,
restrictive-use provisions on MFH projects, personal occupancy,
inability to secure other financing, and restrictions on leasing may be
deleted. Special care should be taken to ensure that only the
aforementioned covenants are deleted. Deletions are made by lining
through only the specific inapplicable language with both the NP
borrower and Rural Development initialing the changes. (Revised
08-20-93, SPECIAL PN.)

\(8\) [Closing sale]{.underline}. Title clearance, loan closing and
property insurance requirements for a credit sale are the same as for a
program loan except:

\(i\) The property will be conveyed in accordance with\
§ 1955.141 (a) of this subpart.

## 28

## (Revision 4) 

RD Instruction 1955-C

§1955.118 (b)(8) (Con.)

\(ii\) The purchaser will pay his/her own closing costs. Earnest money,
if any, will be used to pay purchaser\'s closing costs with any balance
of closing costs being paid by the purchaser. Any closing costs which
are legally or customarily paid by the seller will be paid by Rural
Development from the downpayment.

\(iii\) The County Supervisor or District Director will provide the
closing agent with necessary information for closing the sale. The
assistance of OGC will be requested to provide closing instructions for
all MFH sales. (Revised 11-12-93, SPECIAL PN.)

\(iv\) When more than one property is bought by the same buyer and the
transactions are closed at the same time, a separate promissory note
will be prepared for each property, but one mortgage will cover all the
properties.

\(9\) [Reporting]{.underline}. After the sale is closed, it will be
reported according to §1955.142 of this subpart.

\(10\) [Classification]{.underline}. MFH credit sales on NP terms will
be classified as NP loans and serviced accordingly.\
(Revised 11-12-93, SPECIAL PN.)

\(11\) [Form RD 1910-11, \"Applicant Certification, Federal Collection
Policies for Consumer or Commercial Debts.\"]{.underline} The County
Supervisor or District Director must review Form RD 1910-11, \"Applicant
Certification, Federal Collection Policies for Consumer or Commercial
Debts,\" with the applicant, and the form must be signed by the
applicant.

§1955.119 [Sale of SFH inventory property to a public body or nonprofit
organization]{.underline}. (Added 03-08-90, SPECIAL PN.)

Notwithstanding the provisions of §1955.111 through §1955.118 of this
subpart, this section contains provisions for the sale of SFH inventory
property to a public body or nonprofit organization to use for
transitional housing for the homeless. A public body or nonprofit
organization is a nonprogram applicant. All other SFH credit sales on
nonprogram terms will be handled in accordance with Subpart J of Part
1951 of this chapter. (Revised 11-12-93, SPECIAL PN.)

\(a\) [Method of Sale]{.underline}. The method of sale is according to
{1955.112 of this subpart. Upon request from a public body or nonprofit
organization, Rural Development will provide a list of all SFH inventory
property, regardless of whether it is listed for sale with real estate
brokers. The list will indicate whether the property is program or
nonprogram.

## 28A

## (Revision 2)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§1955.119 (a) (Con.)

Upon written notice of the organization\'s intent to buy a specific
property, if it is not under a sale contract, Rural Development will
withdraw the property from the market for a period not to exceed 30 days
to provide the organization sufficient time to execute Form RD\
1955-45.

\(b\) [Price]{.underline}. The price of the property will be established
according to {1955.113 of this subpart; however, a 10 percent discount
of the listed price is authorized on nonprogram property. No discount is
authorized on program property.

\(c\) [Decent, safe and sanitary (DSS) standards]{.underline}. If an
organization wants to buy a property which does not meet DSS standards,
Rural Development will repair it to meet those standards, including
thermal performance standards, unless Rural Development determines it is
not feasible to do so according to §1955.64 (a)(1)(ii) of Subpart B of
Part 1955 of this chapter. The price will be adjusted to reflect any
resulting change in value. Cosmetic repairs, if needed, such as
painting, floor covering, landscaping, etc., are the responsibility of
the organization. Form RD 1955-44, itemizing the required repairs and
Rural Development\'s agreement to complete them before closing will be
made a part of Form RD 1955-45, the sales contract, before it is signed.
Required repairs must be completed before closing so DSS restrictions
will not be required in the deed.

\(d\) [Approval and closing]{.underline}. Processing cash sales or MFH
credit sales on nonprogram terms is according to §1955.118 of this
subpart, except as follows: (Revised 11-12-93, SPECIAL PN.)

\(1\) [Earnest money deposit]{.underline}. No earnest money deposit is
required.

\(2\) [Downpayment]{.underline}. No downpayment is required.

\(3\) [Term of note]{.underline}. The term of the note may not exceed\
30 years.

§1955.120 [Payment of points (housing)]{.underline}.

To effect regular sale of inventory SFH property to a purchaser who is
financing the purchase of the property with a non-Rural Development
loan, the County Supervisor may authorize the payment by Rural
Development of not more than three points. The payment must be a
customary requirement of the lender for the seller within the community
where the property is located. Terms of payment will be incorporated in
Form RD 1955-45 and will be fixed as of the date the form is signed by
the appropriate Rural Development official. Points will
[not]{.underline} be paid to reduce the purchaser\'s interest rate. The
payment will be deducted from the funds to be received by Rural
Development at closing. These payments will be handled in accordance
with Subpart B of Part 1951 of this chapter. (Revised 11-12-93, SPECIAL
PN.)

## 28B 

## (Revision 1) 

RD Instruction 1955-C

CHATTEL PROPERTY

§ 1955.121 [Sale of acquired chattels (chattel)]{.underline}.

Sections 1955.122 - 1955.124 of this subpart prescribe procedures for
the sale of all acquired chattel property except real property rights.
The State Director is authorized to sell acquired chattels by auction,
sealed bid, regular sale or, for perishable items and crops, by
negotiated sale. The State Director may redelegate authority to any
qualified Agency employee.

§ 1955.122 [Method of sale (chattel)]{.underline}.

Acquired chattels will be sold as expeditiously as possible using the
methods considered most appropriate. If the chattel is not sold within
180 days after acquisition, assistance will be requested as outlined in
§ 1955.143 of this subpart.

\(a\) [Sale to beginning farmers or ranchers]{.underline}. Beginning
farmers or ranchers obtaining special OL loan assistance under § 1941.15
of Subpart A of Part 1941 of this chapter will receive priority in the
purchase of farm equipment held in government inventory during the
commitment period. The county official will notify such
applicants/borrowers of any farm equipment held in government inventory
within the service area of the FSA County Office. These
applicants/borrowers will be given 10 working days to respond that they
are interested in purchasing any or all items of equipment at the
appraised fair market value established by FSA. RD Form Letter 1955-C-1
will be used to notify applicants/\
borrowers of the availability of farm equipment in FSA inventory. The
equipment must be essential to the success of the operation described in
the loan application in order for the applicant to have an opportunity
to purchase such equipment. The county official will determine what
equipment is essential. (Revised 08-20-97, PN 280.)

\(b\) [Regular sale]{.underline}. Chattels will be sold by FSA employees
at market value to program applicants. Form RD 440-21, \"Appraisal of
Chattel Property,\" will be used when appraising chattels for regular
sale. (Renumbered 08-20-97, PN 280.)

\(c\) [Auctions]{.underline}. Section 1955.148 of this subpart provides
detailed guidance on auctions applicable to the sale of chattels, as
supplemented by this section. (Renumbered 08-20-97, PN 280.)

\(1\) [Established public auction]{.underline}. An established public
auction is an auction that is widely advertised and held on a regularly
scheduled basis at the same facility. This method of sale is

## 29

## (Revision 5)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.122(c)(1) (Con.)

particularly suited for the sale of commodities, farm machinery and
livestock. No additional public notice of sale is required other than
that commonly used by the facility. This is the preferred method of
disposal.

\(2\) [Other auctions]{.underline}. Other auctions, whether conducted by
FSA employees or fee auctioneers, are suitable for on-premises sales,
for sale of dissimilar chattels, and for the sale of chattels in
conjunction with the auction of real property. A minimum of 5 days
public notice will be given prior to the date of auction.

\(d\) [Sealed bid sales]{.underline}. Section 1955.147 of this subpart
provides detailed guidance on sealed bid sales applicable to the sale of
chattels. When it is believed that financing will have to be provided
through a credit sale, this method has advantages over auction sales. It
requires, however, additional steps in the event any established minimum
price is not obtained. Preference will be given to a cash offer which is
at least [\*]{.underline} percent of the highest offer requiring credit.
\[\*Refer to Exhibit B of RD Instruction 440.1 (available in any Agency
office) for the current percentage.\] (Renumbered 08-20-97, PN 280.)

\(e\) [Negotiated sale]{.underline}. Perishable acquired items and crops
(except timber) and chattels for which no acceptable bid was received
from auction or sealed bid methods may be sold by direct negotiation for
the best price obtainable. Preference will be given to a cash offer
which is at least [\*]{.underline} percent of the highest offer
requiring credit. \[\*Refer to Exhibit B of RD Instruction 440.1
(available in any Agency office) for the current percentage.\] No public
notice is required to negotiate with interested parties, including prior
bidders. Justification for the use of this method of sale will be
documented.\
A copy of the sale instrument (Form RD 1955-47, \"Bill of Sale \"A\" -
Sale of Government Property\") will be kept in the County or District
Office inventory file. Sale proceeds will be remitted according to RD
Instruction 1951-B (available in any Agency office). A State Supplement,
when needed, will be prepared with the assistance of OGC to provide
additional guidance on negotiated sales and to insure compliance with
State laws. (Renumbered 08-20-97, PN 280.)

\(f\) [Notification]{.underline}. In many states the original owner of
the chattel property must personally be notified of the sale date and
method of sale within a certain time prior to the sale. The State
Director will issue a State Supplement clearly stating what notices are
to be sent, if any. The County Supervisor will review State Supplements
to determine what notices must be sent to the previous owner of the
chattel property prior to the Agency taking action to sell the property.
(Renumbered 08-20-97, PN 280.)

## 30

## (Revision 5) 

RD Instruction 1955-C

§1955.123 [Sale procedures (chattel)]{.underline}.

\(a\) [Credit sales]{.underline}. Although cash sales are preferred in
the sale of chattels, credit sales may be used advantageously in the
sale of chattels to eligible purchasers and to facilitate sales of
high-priced chattels. Credit sales to eligible purchasers will be in
accordance with the provisions of this chapter for the appropriate
program for which a loan would otherwise be made including eligibility
determinations. Preference will be given to a cash offer which is at
least \* percent of the highest offer requiring credit. \[\* Refer to
Exhibit B of RD Instruction 440.1 (available in any Rural Development
office) for the current percentage.\] For FP, County Supervisors,
District Directors, and State Directors are authorized to approve or
disapprove credit sales on eligible terms in accordance with the
respective loan approval authorities in Exhibit C of Subpart A of Part
1901 of this chapter (available in any Rural Development office). The
determination of eligibility of applicants or eligible applicants that
have their application disapproved will be notified of the opportunity
to appeal in accordance with Subpart B of Part 1900 of this chapter.
Credit sales to ineligible purchasers of C&BP chattel property may be
offered on terms of not less than 10 percent downpayment with the
remaining balance amortized over a period not to exceed 5 years. The
interest rate for ineligible purchasers of C&BP chattel property will be
the current ineligible interest rate for FP property set forth in
Exhibit B of RD Instruction 440.1 (available in any Rural Development
office). District Directors and State Directors are authorized to
approve or disapprove credit sales of C&BP chattel property on
ineligible terms in accordance with the respective type of program
approval authorities in Exhibit E of Subpart A of Part 1901 of this
chapter (available in any Rural Development office). For other than
C&BP, credit sales to NP purchasers will be handled in accordance with
Subpart J of Part 1951 of this chapter. (Revised 11-12-93, SPECIAL PN.)

\(b\) [Receipt of payment]{.underline}. Payment will be by cashier\'s
check, certified check, postal or bank money order, or personal check
(not in excess of \$500) made payable to Rural Development. Cash may be
accepted if it is not possible for one of these forms of payment to be
used. Third party checks are not acceptable. Payments will be handled in
accordance with Subpart B of Part 1951 of this chapter. If full payment
is not received at the time of the sale, the offer will be documented by
Form RD 1955-45 or RD 1955-46 where the chattel is sold jointly with
real estate by regular sale. (Revised 11-12-93, SPECIAL PN.)

\(c\) [Transfer of title]{.underline}. Title will be transferred to a
purchaser in accordance with {1955.141 (b) of this subpart.

\(d\) [Reporting sale]{.underline}. Sale will be reported in accordance
with {1955.142 of this subpart.

## 31

## (Revision 4)

(8-24-88) SPECIAL PN

RD Instruction 1955-C

§1955.123 (Con.)

\(e\) [Reporting and disposal of inventory property not
sold]{.underline}. Refer to §1955.143 and 1955.144 of this subpart for
additional guidance in disposing of problem property.

§1955.124 [Sale with inventory real estate (chattel)]{.underline}.

Inventory chattel property may be sold with inventory real estate if a
higher aggregate price can be obtained. Proceeds from a joint sale will
be applied to the respective inventory accounts based on the value of
the property sold. Form RD 440-21 will be used to determine the value of
the chattel property. The offer for the sale of the chattels will be
documented by incorporating the terms and conditions of the sale on Form
RD 1955-45 or Form RD 1955-46, and may be accepted by the appropriate
approval official based upon the combined final sale price.

§1955.125 - 1955.126 \[Reserved\]

USE OF CONTRACTORS TO DISPOSE OF INVENTORY PROPERTY

§1955.127 [Selection and use of contractors to dispose of inventory
property]{.underline}.

Sections 1955.128 - 1955.131 prescribe procedures for contracting for
services to facilitate disposal of inventory property. RD Instruction
2024-A (available in any Rural Development office) is applicable for
procurement of nonpersonal services.

§1955.128 [Appraisers]{.underline} (Revised 11-03-93, SPECIAL PN.)

\(a\) [Real property]{.underline}. The State Director may authorize the
County Supervisor or District Director to procure fee appraisals of
inventory property, except MFH properties, to expedite the sale of
inventory real or chattel property. (Fee appraisals of MFH properties
will only be authorized by the Assistant Administrator, Housing, when
unusual circumstances preclude the use of a qualified Rural Development
MFH appraiser.) The decision will be based on the availability of
comparables, the capability and availability of personnel, and the
number and type of properties (such as large farms and business
property) requiring valuation. For Farmer Programs real estate
properties, all contract (fee) appraisers should include the sales
comparison, income (when applicable), and the cost approach to value.
All Rural Development real estate contract appraisers must be certified
as State-Certified General Appraisers.

\(b\) [Chattel property]{.underline}. For Farmer Programs chattel
appraisals, the chattel contractor/appraiser completing the report must
meet at least one of the following qualifications:

## 32

## (Revision 4) 

RD Instruction 1955-C

§1955.128 (b) (Con.)

\(1\) Certification by a National or State appraisal society.

\(2\) If the contractor is not a certified appraiser and a certified
appraiser is not available, the contractor may qualify or may use other
qualified appraisers, if the contractor can establish that he/she or
that the appraiser meets the criteria for a certification in a National
or State appraisal society.

\(3\) The appraiser has recent, relevant, documented appraisal
experience or training, or other factors clearly establish the
appraiser\'s qualifications.

§1955.129 [Business brokers]{.underline}.

The services of business brokers or business opportunity brokers may be
authorized by he appropriate Assistant Administrator in lieu of or in
addition to real estate brokers for the sale of businesses as a whole,
including good-will and chattel, when:

\(a\) The primary use of the structure included in the sale is other
than residential;

\(b\) The business broker is duly licensed by the respective state; and

## 32A

## (Revision 2)

(8-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.129 (Con.)

\(c\) The primary function of the business is other than farming or
ranching.

§ 1955.130 [Real estate brokers]{.underline}.

Contracting authority for the use of real estate brokers is prescribed
in Exhibit D of RD Instruction 2024-A. Brokers who are managing
custodial or inventory property may also participate in sales activities
under the same conditions offered other brokers. Brokers must be
properly licensed in the State in which they do business.

\(a\) [Types of listings]{.underline}. The State Director may authorize
use of exclusive listings during any calendar year. Since the Agency
receives many more marketing services for its commission dollar and
saves time listing the property with only one broker, it is strongly
recommended that all County Offices be authorized the use of exclusive
brokers.

\(1\) [Exclusive broker contract]{.underline}. An exclusive broker
contract provides for the selection of one broker by competitive
negotiation who will be the only authorized broker for the Agency office
awarding the contract within a defined area and for specific property or
type of property. Criteria will be specified in the solicitation
together with a numerical weighting system to be used (usually 1 - 100).
Responses will be calculated on the basis of the criteria such as
personal qualifications, membership in Multiple Listing Service (MLS),
previous experience with Agency sales, advertising plans, proposed
innovative promotion methods, and financial capability. The
responsibilities of the broker under an exclusive broker contract exceed
those of the open listing agreement and therefore, an exclusive broker
contract is the preferred method of listing properties.

\(2\) [Open listing]{.underline}. Open listing agreements provide for
any licensed real estate broker to provide sales services for any
property listed under the terms and conditions of Form RD 1955-42,
\"Open Real Property Master Listing Agreement.\" If this method is used,
a newspaper advertisement will be published at least once yearly, or a
notice sent to all real estate brokers in the counties served by the
Agency office, informing brokers that sales services are being
requested. The advertising will be substantially similar to the example
given in Exhibit B of this subpart. An open listing agreement may be
executed at any time during the year, but must be effective prior to the
broker showing the property. When this method is used, the Agency Office
is responsible for ensuring that adequate advertising is performed to
effectively market the property.

## 33

## (Revision 1)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.130 (Con.)

\(b\) [Listing notices]{.underline}. Forms RD 1955-40 or RD 1955-43, as
appropriate, will be used to provide brokers with notice of initial
listing, withdrawal, price change, terms change, relisting, sale
cancellation, restrictions on sale, etc.

\(c\) [Priority of offers]{.underline}. All offers received during the
same business day will be considered as having been received at the same
time. The successful offer from among equally acceptable offers within
each category will be determined by lot by the Agency. Priority rules
for specific categories of property are:

\(1\) [Program SFH]{.underline}. See § 1955.114(a) of this subpart.

\(2\) [Program MFH]{.underline}. Offers will be considered from program
applicants only.

\(3\) [NP SFH]{.underline}. See § 1955.115(a) of this subpart.

\(4\) [NP MFH]{.underline}. See § 1955.115(b) of this subpart.

\(5\) [Suitable and Surplus CONACT]{.underline}. See § 1955.107 of this
subpart.

\(6\) [Suitable, Surplus non-FSA CONACT]{.underline}. See § 1955.108 of
this subpart.

\(d\) [Price]{.underline}. No offer for less than the listed price will
be accepted during the period of regular sale.

\(e\) [Earnest money]{.underline}. The broker will collect earnest money
in the amount specified in paragraph (e)(1) of this section when a sale
contract is exempted. The earnest money will be retained by the broker
until contract closing, withdrawal, cancellation, or rejection by the
Agency. When a contract is cancelled because the Agency rejects the
offeror\'s application for credit, the earnest money will be refunded to
the offeror. When a contract closes, the broker will make the earnest
money available to be used toward closing costs, or in the case of a
cash sale it may be returned to the purchaser. For MFH sales to profit
or limited profit buyers, any excess earnest money deposit will be
credited to the purchaser\'s initial investment.

\(1\) [Amount]{.underline}. The amount of earnest money collected will
be:

\(i\) For single family properties or MFH projects of 2 to 5 units,
\$50.

\(ii\) For all property other than that covered in paragraph (e)(1)(i)
of this section, the [greater]{.underline} of the estimated closing

## 34

## (Revision 1) 

§1955.130(e)(1)(ii)(Con.) RD Instruction 1955-C

costs shown on the notice of listing (Form RD 1955-40) or 1/2 of 1
percent of the purchase price.

\(2\) [Offeror default]{.underline}. When a contract is cancelled due to
offeror default, the earnest money will be delivered to and retained by
Rural Development as full liquidated damages and will be remitted by the
servicing official according to RD Instruction 1951-B (available in any
Rural Development Office) for application to the General Fund.

\(f\) [Commission]{.underline}.

\(1\) [Amount]{.underline}.

\(i\) [Exclusive broker contract]{.underline}. Rural Development may not
set the commission rate in an exclusive broker solicitation/contract.
The rate of commission will be one of the evaluation criteria in the
solicitation. However, any broker who submits an offer with a commission
rate lower than the typical rate for such services in the area must
provide documentation that they have successfully sold properties at the
lower rate with no compromise in services. The solicitation/contract
will explicitly detail this policy.

\(ii\) [Open listing agreement]{.underline}. A uniform fee or commission
schedule, by property type, will be established by the servicing
official within a given sales area. The commission rate to be paid will
be the typical rate for such services in the sales area and will not
exceed or be lower than commissions paid for similar types of services
provided by the broker to other sellers of similar property.

\(2\) [Special effort sales bonuses]{.underline}. The servicing official
may request authorization from the State Director to pay fixed amount
bonuses for special effort property, such as a property with a value so
low that the commission alone does not warrant broker interest or
property that has been held in inventory for an extended period of time
where it is believed that an added bonus will create additional efforts
by the broker to sell the property. The State Director may authorize use
of short-term (not to exceed three months) special effort sales bonuses
on a group, county, district or state-wide basis, if it appears
necessary to facilitate the sale of nonprogram property. (Revised
03-08-90, SPECIAL PN.)

\(3\) [Payment of commission]{.underline}. Payment of a broker\'s
commission is contingent on the closing of the sale and will not be paid
until the sale has closed and title has passed to the purchaser. No
commission will be paid where the sale is to the broker, broker\'s

## 

## 35

## (Revision 1)

(8-24-88) SPECIAL PN

RD Instruction 1955-C

§1955.130(f)(3)(Con.)

salesperson(s), to persons living in his/her or salesperson(s) immediate
household or to legal entities in which the broker or salesperson(s)
have an interest if the sale is contingent upon receiving Rural
Development credit. If credit is not being extended in these instances
(a cash sale), a commission will be paid. Under an exclusive broker
contract, if a cooperating broker purchases the property and is
receiving Rural Development credit, one-half the respective commission
will be paid to the exclusive broker. Commissions will be paid at
closing if sufficient cash to cover the commission is paid by the
purchaser. Otherwise, the commission will be paid by the appropriate
Rural Development official by completing Form AD-838 and processing Form
RD 838-B for payment in accordance with the respective FMI\'s, and
charged to the inventory account as a nonrecoverable cost.

\(g\) [Nondiscrimination]{.underline}. Brokers who execute listing
agreements with Rural Development shall certify to nondiscrimination
practices as provided in Form RD 1955-42. In addition, all brokers
participating in the sale of property shall sign the nondiscrimination
certification on Form RD 1955-45.

§1955.131 [Auctioneers]{.underline}.

The services of licensed auctioneers, if required, may be used to
conduct auction sales as described in §1955.148 of this subpart and
procured by competitive negotiation under the contracting authority of
RD Instruction 2024-A (available in any Rural Development office).

\(a\) [Selection criteria]{.underline}. The auctioneer should be
selected by evaluating criteria such as proposed sales dates, location,
advertising, broker cooperation, innovations, mechanics of sale, sample
advertising, personal qualification, financial capability, private
sector financing and license/bonding.

\(b\) [Commission]{.underline}. Rural Development may not set the
commission rate in an auctioneer solicitation/contract. The rate of
commission will be one of the evaluation criteria in the solicitation.
However, any offeror that submits an offer with a commission rate lower
than the typical rate for such services in the area must include
documentation that they have successfully sold properties at the lower
rate with no compromise in services. The solicitation/contract will
explicitly detail this policy. Commissions will be paid at closing if
sufficient cash to cover the commission is paid by the purchaser.
Otherwise, the commission will be paid by the appropriate Rural
Development official by completing Form AD-838 and processing Form RD
838-B for payment in accordance with the respective FMI\'s, and charged
to the inventory account as a nonrecoverable cost.

## 36

## (Revision 1) 

§1955.131(c)(Con.) RD Instruction 1955-C

\(c\) [Auctioneer restriction]{.underline}. The auctioneer, his/her
sales agents, cooperating brokers or persons living in his, her or their
immediate household are restricted from bidding or from subsequent
purchase of any property sold or offered at the auctioneer\'s sale for a
period of one year from the auction date.

GENERAL

§1955.132 [Pilot projects]{.underline}.

Rural Development may conduct pilot projects to test policies and
procedures for the management and disposition of inventory property
which deviate from the provisions of this subpart, but are not
inconsistent with the provisions of the authorizing statute or other
applicable Acts. A pilot project may be conducted by Rural Development
employees or by contract with individuals, organizations or other
entities. Prior to initiation of a pilot project, Rural Development will
publish notice in the Federal Register of its nature, scope, and
duration. (Added 03-08-90, SPECIAL PN.)

§1955.133 [Nondiscrimination]{.underline}.

\(a\) [Title VI provisions]{.underline}. If the inventory real property
to be sold secured a loan that was subject to Title VI of the Civil
Rights Act\
of 1964, and the property will be used for its original or similar
purpose, or if Rural Development extends credit and the property then
becomes subject to Title VI, the buyer will sign Form RD 400-4,
\"Assurance Agreement.\" The instrument of conveyance will contain the
following statement:

\"The property described herein was obtained or improved through Federal
financial assistance. This property is subject to the provisions of
Title VI of the Civil Rights Act of 1964 and the regulations issued
pursuant thereto for so long as the property continues to be used for
the same or similar purposes for which the Federal financial assistance
was extended.\"

\(b\) [Affirmative Fair Housing Marketing Plan]{.underline}. Exclusive
listing brokers or auctioneers selling SFH properties having 5 or more
properties in the same subdivision listed offered for sale at the same
time will prepare and submit to Rural Development an acceptable Form HUD
932.5, \"Affirmative Fair Housing Marketing Plan,\" for each such
subdivision in accordance with §1901.203(c) of Subpart E of Part 1901 of
this chapter.

\(c\) [Equal Housing Opportunity logo]{.underline}. All Rural
Development and contractor sale advertisements will contain the Equal
Housing Opportunity logo.

§1955.134 [Loss, damage, or existing defects in inventory real
property]{.underline}.

\(a\) [Property under contract]{.underline}. If a bid or offer has been
accepted by the Rural Development and through no fault of either party,
the property is lost or damaged as a result of fire, vandalism, or an
act of God between the time of acceptance of the bid or offer and the
time the title of the property is conveyed by Rural Development, Rural
Development will reappraise the property. The reappraised value of the
property will serve as the amount Rural Development will accept from the
purchaser. However, if the actual loss based on the reduction in market
value of the property as determined by Rural Development is less than
\$500, payment of

## 37

## (Revision 2)

(8-24-88) SPECIAL PN

RD Instruction 1955-C

§1955.134 (a)(Con.)

the full purchase price is required. In the event two parties cannot
agree upon an adjusted price, either party, by mailing notice in writing
to the other, may terminate the contract of sale, and the bid deposit or
earnest money, if any, will be returned to the offeror.

\(b\) [Existing defects]{.underline}. Rural Development does not provide
any warranty on property sold from inventory. Subsequent loans may be
made, in accordance with applicable loan making regulations for the
respective loan program, to correct defects.

§1955.135 [Taxes on inventory real property]{.underline}. (Revised
03-25-91, SPECIAL PN.)

Where Rural Development owned property is subject to taxation, taxes and
assessment installments will be prorated between Rural Development and
the purchaser as of the date the title is conveyed in accordance with
the conditions of Forms RD 1955-45 or RD 1955-46. The purchaser will be
responsible for paying all taxes and assessment installments accruing
after the title is conveyed. The County Supervisor or District Director
will advise the taxing authority of the sale, the purchaser\'s name, and
the description of the property sold. Only the prorata share of
assessment installments for property improvements (water, sewer, curb
and gutter, etc.) accrued as of the date property is sold will be paid
by Rural Development for inventory property. At the closing, payment of
taxes and assessment installments due to be paid by Rural Development
will be paid from cash proceeds Rural Development is to receive as a
result of the sale or by voucher and will be accomplished by one of the
following:

\(a\) For purchasers receiving Rural Development credit and required to
escrow, Rural Development\'s share of accrued taxes and assessment
installments will be deposited in the purchaser\'s escrow account.

\(b\) For purchasers not required to escrow, accrued taxes and
assessment installments may be:

\(i\) Paid to the local taxing authority if they will accept payment at
that time; or

\(ii\) Paid to the purchaser. If appropriate, for program purchasers,
the funds can be deposited in a supervised bank account until the taxes
can be paid.

\(c\) Except for SFH, deducted from the sale price (which may result in
a promissory note less than the sale price), if acceptable to the
purchaser.

§1955.136 [Environmental Assessment (EA) and Environmental Impact
Statement (EIS)]{.underline}.

\(a\) Prior to a final decision on some disposal actions, an
environmental assessment must be made and when necessary, an
environmental impact statement. Detailed guidance on when and how to

## 38

## (Revision 2) 

RD Instruction 1955-C

§ 1955.136(a) (Con.)

prepare an EA or an EIS is found in Subpart G of Part 1940 of this
chapter. Assessments must be made for those proposed conveyances that
meet one of the following criteria:

\(1\) The conveyance is controversial for environmental reasons and/or
is qualified within those categories described in § 1955.137 of this
subpart.

\(2\) The Agency approval official has reason to believe the conveyance
would result in a change in the use of the real property. For example,
farmland would be converted to a nonfarm use; or an industrial facility
would be changed to a different industrial use that would produce
increased gaseous, liquid or solid wastes over the former use or changes
in the type or contents of such wastes. Assessments are not required for
conveyance where the real property would be retained in its former use
within the reasonably foreseeable future.

\(b\) When an EA or EIS is prepared it shall address the requirements of
Departmental Regulation 9500-3, \"Land Use Policy,\" in connection with
the conversion to other uses of prime and unique farmlands, farmlands of
statewide or local importance, prime forest and prime rangelands, the
alteration of wetlands or flood plains, or the creation of nonfarm uses
beyond the boundaries of existing settlements.

§ 1955.137 [Real property located in special areas or having special
characteristics]{.underline}.

\(a\) [Real property located in flood, mudslide hazard, wetland, or
Coastal Barrier Resources System (CBRS)]{.underline}. (Revised 08-20-97,
PN 280.)

\(1\) [Use restrictions]{.underline}. Executive Order 11988,
\"Floodplain Management,\" and Executive Order 11990, \"Protection of
Wetlands,\" require the conveyance instrument for inventory property
containing floodplains or wetlands which is proposed for lease or sale
to specify those uses that are restricted under identified Federal,
State and local floodplains or wetlands regulations as well as other
appropriate restrictions. The restrictions shall be to the uses of the
property by the lessee or purchaser and any successors, except where
prohibited by law, as determined by the Agency official responsible for
the conveyance. Applicable restrictions will be incorporated into
quitclaim deeds in a format similar to that contained in Exhibits H and
I of this subpart with the advice and approval of OGC. A listing of all
restrictions will be included in the notices required in paragraph
(a)(2) of this section.\
(Revised 08-20-97, PN 280.)

## 39

## (Revision 2)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.137(a) (Con.)

\(2\) [Notice of hazards]{.underline}. Acquired real property located in
an identified special flood or mudslide hazard area as defined in
Subpart B of part 1806 of this chapter (RD Instruction 426.2) will not
be sold for residential purposes unless determined by the County
official or District Director to be safe (that is, any hazard that
exists would not likely endanger the safety of dwelling occupants).
Prior written notice of the specific hazard must be given to prospective
purchasers. The notice will be prepared in accordance with the
following:

\(i\) [Inventory property offered for sale.]{.underline} The county
official or District Director will inform prospective purchasers at the
time of the first inquiry and in any notice of public sale that the
property is located in a special flood, mudslide hazard or wetland area
and specify any use restrictions resulting from this location. The
county official or District Director will also prepare and deliver a
written notice to the prospective purchaser at the time the bid or offer
to purchase is signed by the purchaser. The prospective purchaser will
acknowledge the receipt of the notice. Exhibit A of this subpart may be
used as a guide for preparing the notice and the acknowledgment. The
acknowledgment will be placed in the inventory property file. (Revised
08-20-97, PN 280.)

\(ii\) [Property offered for sale though real estate brokers or
auctioneers]{.underline}. If real estate brokers or auctioneers are
engaged to sell inventory property, they must notify prospective
purchasers in writing that the property is located in a special flood,
mudslide hazard, or wetland area and specify any use restrictions
resulting from this location.

\(A\) When sending Forms RD 1955-40, RD 1955-43, or other notice to the
brokers or auctioneers listing property for sale, the County official or
District Director will attach a written notice and acknowledgment as a
guide in meeting this requirement. Exhibit A of this subpart may be used
for this purpose.

\(B\) After the prospective purchaser signs the acknowledgement, the
broker or auctioneer will forward it to the county official or District
Director, as appropriate, with Form RD 1955-45 or Form RD 1955-46.

\(3\) [Limitations placed on financial assistance]{.underline}.

\(i\) Financial assistance is limited to property located in areas where
flood insurance is available. Flood insurance must

## 40

## (Revision 2) 

RD Instruction 1955-C

§ 1955.137(a)(3)(i) (Con.)

be provided at closing of loans on program/eligible and nonprogram
(NP)/ineligible terms. Appraisals of property in flood or mudslide
hazard areas will reflect this condition and any restrictions on use.
Financial assistance for substantial improvement or repair of property
located in a flood or mudslide hazard area is subject to the limitations
outlined in paragraph 3 (b)(1) and (2) of Exhibit C of Subpart G of\
Part 1940.

\(ii\) Pursuant to the requirements of the Coastal Barrier Resources Act
(CBRA) and except as specified in paragraph (a)(3)(v) of this section,
no credit sales will be provided for property located within a CBRS
where:

\(A\) It is known that the purchaser plans to further develop the
property;

\(B\) A subsequent loan or any other type of federal financial
assistance as defined by the CBRA has been requested for additional
development of the property;

\(C\) The sale is inconsistent with the purpose of the CBRA; or

\(D\) The property to be sold was the subject of a previous financial
transaction that violated the CBRA.

\(iii\) For purposes of this section, additional development means the
expansion, but not maintenance, replacement-in-kind, reconstruction, or
repair of any roads, structures or facilities. Water and waste disposal
facilities as well as community facilities may be repaired to the extent
required to meet health and safety requirements, but may not be improved
or expanded to serve new users, patients or residents.

\(iv\) A sale which is not in conflict with the limitations in paragraph
(a)(3)(ii) of this section shall not be completed until the approval
official has consulted with the appropriate Regional Director of the
U.S. Fish and Wildlife Service and the Regional Director concurs that
the proposed sale does not violate the provisions of the CBRA.

## 41

## (Revision 2)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.137(a)(3) (Con.)

\(v\) Any proposed sale that does not conform to the requirements of
paragraph (a)(3)(ii) of this section must be forwarded to the
Administrator for review and approval. Approval will not be granted
unless the Administrator determines, through consultation with the
Department of Interior, that the proposed sale does not violate the
provisions of the CBRA.

\(b\) [Wetlands located on FSA inventory property]{.underline}.
Perpetual wetland conservation easements (encumbrances in deeds) to
protect and restore wetlands that exist on suitable or surplus inventory
property will be established prior to sale of such property. The
provisions of paragraphs (a)(2) and (3) also apply, as does paragraph
(a)(1) insofar as floodplains are concerned. This requirement applies to
either cash or credit sales. Similar restrictions will be included in
leases of inventory properties to beginning farmers or ranchers. Wetland
conservation easements will be established as follows:\
(Revised 08-20-97, PN 280.)

\(1\) All wetlands or converted wetlands located on FSA inventory
property which were not considered cropland on the date the property was
acquired and were not used for farming at any time during the period
beginning on the date 5 years before the property was acquired and
ending on the date the property was acquired will receive a wetland
conservation easement.

> \(2\) All wetlands or converted wetlands located on FSA inventory
> property that were considered cropland on the date the property was
> acquired or were used for farming at any time during the period
> beginning on the date 5 years before the property was acquired and
> ending on the date the property was acquired will not receive a
> wetland conservation easement.

\(3\) The following steps should be taken in determining if conservation
easements are necessary for the protection of wetlands or converted
wetlands on inventory property:

\(i\) NRCS will be contacted first to identify the wetlands or converted
wetlands and wetland boundaries of each wetland or converted wetland on
inventory property. NRCS should be requested to not identify prior
converted and frequently cropped wetlands.

## 42

## (Revision 2) 

RD Instruction 1955-C

§ 1955.137(b)(3) (Con.)

\(ii\) After receiving the wetland determination from NRCS, FSA will
review the determination for each inventory property and determine if
any of the wetlands or converted wetlands identified by NRCS were
considered cropland on the date the property was acquired or were used
for farming at any time during the period beginning on the date 5 years
before the property was acquired and ending on the date the property was
acquired. Property will be considered to have been used for farming if
it was used for agricultural purposes including but not limited to such
uses as cropland, pasture, hayland, orchards, vineyards and tree
farming. (Revised 09-10-03,\
PN 363.)

\(iii\) After FSA has completed the determination of whether the
wetlands or converted wetlands located on an inventory property were
used for cropland or farming, the U.S. Fish and Wildlife Service (FWS)
will be contacted. Based on the technical considerations of the
potential functions and values of the wetlands on the property, FWS will
identify those wetlands or converted wetlands as determined that require
protection with a wetland conservation easement along with the
boundaries of the required wetland conservation easement. FWS may also
make other recommendations if needed for the protection of important
resources such as threatened or endangered species during this review.
(Revised 09-10-03, PN 363.)

\(4\) The wetland conservation easement will provide for access to other
portions of the property as necessary for farming and other uses.

\(5\) The appraisal of the property must be updated to reflect the value
of the land due to the conservation easement on the property.

\(6\) Easement areas shall be described in accordance with State or
local law. If State or local law does not require a survey, the easement
area can be described by rectangular survey, plat map, or other
recordable methods.

\(7\) In most cases the FWS shall be responsible for easement management
and administration responsibilities for such areas unless the wetland
easement area is an inholding in Federal or State property and that
entity agrees to assume such responsibility, or a State fish and
wildlife agency having counterpart responsibilities to the FWS is
willing to assume easement management and administration
responsibilities. The costs associated with such easement management
responsibilities shall be the responsibility of the agency that assumes
easement management and administration.

## 42A

## (Revision 3)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.137(b) (Con.)

\(8\) County officials are encouraged to begin the easement process
before the property is taken into inventory, if possible, in order to
have the program completed before the statutory time requirement for
sale.

\(c\) [Historic preservation]{.underline}. (Renumbered 08-20-97, PN
280.)

\(1\) Pursuant to the requirements of the National Historic Preservation
Act and Executive Order 11593, \"Protection and Enhancement of the
Cultural Environment,\" the Agency official responsible for the
conveyance must determine if the property is listed on or eligible for
listing on the National Register of Historic Places. (See Subpart F of
part 1901 for additional guidance.) To determine the former, the current
listing of the Register is reviewed. To determine the latter, the State
Historic Preservation Officer (SHPO) must be consulted whenever one of
the following criteria are met:

\(i\) The property includes a structure that is more than\
50 years old.

\(ii\) Regardless of age, the property is known to be of historic or
archaeological importance or has apparent significant architectural
features or is similar to other Agency properties that have been
determined to be eligible. (Revised 08-20-97, PN 280.)

\(iii\) An environmental assessment is required prior to a decision on
the conveyance.

\(2\) When consultation is not required based upon the above criteria,
the responsible Agency official shall note in the inventory file the
basic reason why no consultation was necessary. For example, the running
record may indicate the property to be conveyed may be a standard,
10-year old, single family house, a check may have been made with a
local historical society on a less obvious property may have been
previously cleared.

\(3\) If the result of the consultations with the SHPO is that a
property may be eligible or that it is questionable, an official
determination must be obtained from the Secretary of the Interior. The
State Office should be contacted for assistance in obtaining this
determination. The National Office Program Support Staff is also
available to assist the State Office.

## 42B

## (Revision 3) 

RD Instruction 1955-C

§ 1955.137(c) (Con.)

\(4\) If a property is listed on the National Register or is determined
eligible for listing by the Secretary of Interior, the Agency official
responsible for the conveyance must consult with the SHPO in order to
develop any necessary restrictions on the use of the property so that
the future use will be compatible with preservation objectives and which
does not result in an unreasonable economic burden to public or private
interest. The Advisory Council on Historic Preservation must be
consulted by the State Director or State Executive Director after the
discussions with the SHPO are concluded regardless of whether or not an
agreement is reached.

\(5\) Any restrictions that are developed on the use of the property as
a result of the above consultations must be made known to potential
bidder or purchasers through a notice procedure similar to that in §
1955.137(a)(2) of this subpart.

\(d\) [Highly erodible farmland]{.underline}. (Renumbered 08-20-97, PN
280.)

\(1\) The FSA County official will determine if any inventory property
contains highly erodible land as defined by the NRCS and, if so, what
specific conservation practices will be made a condition of a sale of
the property. This should be done by reviewing the conservation plan
prepared for the inventory property. See

§ 1955.64(a)(3) of Subpart B of this part. If this review determines
that sufficient information does not exist on the locations of highly
erodible land or recommended conservation practices, the NRCS shall be
contacted and requested to provide the necessary information. (Revised
08-20-97, PN 280.)

\(2\) If the County official does not concur in the need for a
conservation practices recommended by NRCS, any differences shall be
discussed with the recommending NRCS office. Failure to reach an
agreement at that level shall require that State Executive Director to
make a final decision after consultation with the NRCS State
Conservationist. (Revised 08-20-97, PN 280.)

\(3\) Whenever NRCS technical assistance is requested in implementing
these requirements and NRCS responds that it cannot provide such
assistance within a timeframe compatible with the proposed sale, the
County official will determine if the sale arrangements should go
forward or be delayed. If the property either is known to contain highly
erodible land or there is visible evidence of erosion problems, a sale
of the property will be delayed until NRCS can respond. Otherwise, the
sale may proceed, conditioned on the

## 43

## (Revision 2)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.137(d)(3) (Con.)

requirement that a purchaser will immediately contact NRCS and have a
conservation plan developed. The County official will monitor the
borrower\'s compliance with the recommendations in the conservation
plan. If problems occur in obtaining NRCS assistance, the State
Executive Director should consult with the NRCS State Conservationist.
The potential for response to problems arising can be diminished by
ensuring that all farmland in inventory has a conservation plan
developed in accordance with § 1955.64(a)(3) of Subpart B of this part
and that NRCS assistance is requested immediately after acquiring title.
(Revised 08-20-97, PN 280.)

\(4\) The steps taken and results achieved in order to comply with the
provisions of this paragraph shall be documented in the environmental
review conducted for the proposed sale. All prospective purchasers must
be made aware at the time of first inquiry of the conservation practices
to be required. Therefore, the environmental review must be completed as
soon as possible after acquiring title to the property.

\(e\) [Notification to purchasers of inventory property with reportable
underground storage tanks]{.underline}. If the Agency is selling
inventory property containing a storage tanks which was reported to the
Environmental Protection Agency (EPA) pursuant to the provisions of §
1955.57 of Subpart B of part 1955, the potential purchasers will be
informed of the reporting requirement and provided a copy of the report
filed by the Agency. (Renumbered 08-20-97, PN 280.)

\(f\) [Real property that is unsafe]{.underline}. If the Agency has in
inventory, real property, exclusive of any improvements, that is unsafe,
that is it does not meet the definition of \"safe\" as contained in §
1955.103 of this Subpart and which cannot be feasibly made safe, the
State Director or State Executive Director will submit the case file,
together with documentation of the hazard and a recommended course of
action to the National Office, ATTN: appropriate Deputy Administrator,
for review and guidance. (Renumbered 08-20-97, PN 280.)

> \(g\) [Real property containing hazardous waste
> contamination]{.underline}. All inventory property must be inspected
> for hazardous waste contamination either through the use of a
> preliminary hazardous waste site survey or Transaction Screen
> Questionnaire. If possible contamination is noted, a Phase I or II
> environmental assessment will be completed per the advice of the State
> Environmental Coordinator. (Added 08-20-97, PN 280.)

44

## (Revision 2) 

RD Instruction 1955-C

§ 1955.138 [Property subject to redemption rights]{.underline}.

If, under State law, the Agency's interest may be sold subject to
redemption rights, the property may be sold provided there is no
apparent likelihood of its being redeemed.

\(a\) A credit sale of a program or suitable property subject to
redemption rights may be made to a program applicant when the property
meets the standards for the respective loan program. In areas where
State law does not provide for full recovery of the cost of repairs
during the redemption period, a program sale is generally precluded
unless the property already meets program standards.

\(b\) Each purchaser will sign a statement acknowledging that:

\(1\) The property is subject to redemption rights according to State
law, and

\(2\) If the property is redeemed, ownership and possession of the
property would revert to the previous owner and likely result in loss of
any additional investment in the property not recoverable under the
State\'s provisions of redemption.

\(c\) The signed original statement will be filed in the purchaser\'s
County or District Office case file.

\(d\) If real estate brokers or auctioneers are engaged to sell the
property, the County Supervisor or District Director will inform them of
the redemption rights of the borrower and the conditions under which the
property may be sold.

\(e\) The State Director, with prior approval of OGC, will issue a State
Supplement incorporating the requirements of this section and providing
additional guidance appropriate for the State.

## 44A

## (Added 08-20-97, PN 280)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.139 [Disposition of real property rights and title to real
property]{.underline}. (Revised 10-14-88, SPECIAL PN.)

\(a\) [Easements, rights-of-way, development rights, restrictions or the
equivalent thereof]{.underline}. The State Director is authorized to
convey these rights for conservation purposes, roads, utilities, and
other purposes as follows:

\(1\) Except as provided in paragraph (a)(3) of this section, easements
or rights-of-way may be conveyed to public bodies or utilities if the
conveyance is in the public interest and will not adversely affect the
value of the real estate. The consideration must be adequate for the
inventory property being released or for a purpose which will enhance
the value of the real estate. If there is to be an assessment as a
result of the conveyance, relative values must be considered, including
any appropriate adjustment to the property\'s market value, and adequate
consideration must be received for any reduction in value.

\(2\) Except as provided in paragraph (a)(3) of this section, easements
or rights-of-way may be sold by negotiation for market value to any
purchaser for cash without giving public notice if the conveyance would
not change the classification from program/suitable to NP or surplus,
nor decrease the value by more than the price received. Sale proceeds
will be handled in accordance with

Subpart B of part 1951 of this chapter.

\(3\) For FSA properties only, easements, restrictions, development
rights or similar legal rights may be granted or sold separately from
the underlying fee or sum of all other rights possessed by the
Government if such conveyances are for conservation purposes and are
transferred to a State, a political subdivision of a State, or a private
nonprofit organization. Easements may be granted or sold to a Federal
agency for conservation purposes as long as the requirements of §
1955.139(c)(2) of this Subpart are followed. If FSA has an affirmative
responsibility such as protecting an endangered species as provided for
in paragraph (a)(3)(v) of this section, the requirements in §
1955.139(c)(2) of this Subpart do not apply. (Revised 08-20-97, PN 280.)

## 45

## (Revision 2)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.139(a)(3) (Con.)

\(i\) Conservation purposes include but are not limited to protecting or
conserving the following environmental resources or land uses:

\(A\) Fish and wildlife habitats of local, regional State, or Federal
importance, (Revised 10-14-88, SPECIAL PN.)

\(B\) Floodplain and wetland areas as defined in Executive Orders 11988
and 11990, (Revised 10-14-88, SPECIAL PN.)

\(C\) Highly erodible land as defined by NRCS,

\(D\) Important farmland, prime forest land, or prime rangeland as
defined in Departmental Regulation 9500-3, \"Land Use Policy.\"

\(E\) Aquifer recharge areas of local, regional or state importance,

\(F\) Areas of high water quality or scenic value, and

\(G\) Historic and cultural properties.

\(ii\) Development rights may be sold for conservation purposes for
their market value to a unit of local or State governmental or a private
nonprofit organization by negotiation.

\(iii\) An easement, restriction or the equivalent thereof may be
granted or sold for less than market value to a unit of local, State,
Federal government or a private nonprofit organization for conservation
purposes. If such a conveyance will adversely affect the Agency's
financial interest, the State Director will submit the proposal to the
Administrator for approval unless the State Director has been delegated
approval authority in writing from the Administrator to approve such
transactions based upon demonstrated capability and experience in
processing such conveyances. Factors to be addressed in formulating such
a request include the intended conservation purpose(s) and the
environmental importance of the affected property, the impact to the
Government\'s financial interest, the financial resources of the
potential purchaser or grantee and its normal method of acquiring
similar property rights, the likely impact to environment should the
property interest not be sold or granted and any other relevant factors
or concerns prompting the State Director\'s request.\
(Revised 10-14-88, SPECIAL PN.)

## 46

## (Revision 2) 

RD Instruction 1955-C

§ 1955.139(a)(3) (Con.)

\(iv\) Property interests under this paragraph may be conveyed by
negotiation with any eligible recipient without giving public notice if
the conveyance would not change program/suitable property to NP or
surplus. Sales proceeds will be handled in accordance with Subpart B of
Part 1951 of this chapter. Conveyances shall include terms and
conditions which clearly specify the property interest(s) being conveyed
as well as all appropriate restrictions and allowable uses. The
conveyances shall also require the owner of such interests to permit the
appropriate Agency, and any person or government entity designated by
the appropriate Agency, to have access to the affected property for the
purpose of monitoring compliance with terms and conditions of the
conveyance. To the maximum extent possible, the conveyance should
designate an organization or government entity for monitoring purposes.
In developing the conveyance, the approval official shall consult with
any State or Federal Agency having special expertise regarding the
environmental resource(s) or land uses to be protected.

\(v\) For FP cases except when FSA has an affirmative responsibility to
place a conservation easement upon a farm property, easements under the
authority of this paragraph will not be established unless either the
rights of all prior owner(s) have been met or the prior owner(s)
consents to the easement. Examples of instances where an affirmative
responsibility exists to place an easement on a farm property to include
wetland and floodplain conservation easements required by § 1955.137 of
this Subpart or easements designated as environmental mitigation
measures and required in the implementation of Subpart G of part 1940 of
this chapter for the purpose of protecting federally designated
important environmental resources. These resources include: listed or
proposed endangered or threatened species, listed or proposed critical
habitats, designated or proposed wilderness areas, designated or
proposed wild or scenic rivers, historic or archaeological sites listed
or eligible for listing on the National Register of Historic Places,
coastal barriers included in Coastal Barrier Resource Systems, natural
landmarks listed on National Registry of Natural Landmarks, and sole
source aquifer recharge as designated by the Environmental Protection
Agency. (Revised 08-20-97, PN 280.)

## 47

## (Revision 2)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.139(a)(3) (Con.)

\(vi\) For FSA cases whenever a request is made for an easement under
the authority of this paragraph and such request overlaps an area upon
which FSA has an affirmative responsibility to place an easement, that
required portion of the easement either in terms of geographical extent
or content, will not be considered to adversely impact the value of the
farm property. (Revised 08-20-97, PN 280.)

\(4\) A copy of the conveyance instrument will be retained in the County
or District Office inventory file. The grantee is responsible for
recording the instrument.

\(b\) [Mineral and water rights, mineral lease interests, air rights,
and agricultural or other leases]{.underline}.

\(1\) Mineral and water rights, mineral lease interests, mineral royalty
interests, air rights, and agricultural and other lease interests will
be sold with the surface land and will not be sold separately, except as
provided in paragraph (a) of this section and in § 1955.66(a)(2)(iii) of
Subpart B of part 1955. If the land is to be sold in separate parcels,
any rights or interests that apply to each parcel will be included with
the sale.

\(2\) Lease or royalty interests not passing by deed will be assigned to
the purchaser when property is sold. The County Supervisor or District
Director, as applicable, will notify the lessee or payor of the
assignment. A copy of this notice will be furnished to the purchaser.

\(3\) The value of such rights, interests or lessees will be considered
when the property is appraised.

\(c\) [Transfer of FSA inventory property for conservation
purposes]{.underline}. (Revised 08-20-97, PN 280.)

\(1\) In accordance with the provisions of this paragraph, FSA may
transfer, to a Federal or State agency for conservation purposes (as
defined in paragraph (a)(3)(i) of this section), inventory property, or
an interest therein, meeting any one of the following three criteria and
subject only to the homestead protection rights of all previous owners
having been met.

## 48

## (Revision 2) 

RD Instruction 1955-C

§ 1955.139(c)(l) (Con.)

\(i\) A predominance of the land being transferred has marginal value
for agricultural production. This is land that NRCS has determined to be
either highly erodible or generally not used for cultivation, such as
soils in classes IV, V, VII or VIII of NRCS\'s Land Capability
Classification, or

\(ii\) A predominance of land being environmentally sensitive. This is
land that meets any of the following criteria:

\(A\) Wetlands, as defined in Executive Order 11990 and USDA Regulation
9500-3.

\(B\) Riparian zones and floodplains as they pertain to Executive Order
11988.

\(C\) Coastal barriers and zones as they pertain to the Coastal Barrier
Resources Act or Coastal Zone Management Act.

\(D\) Areas supporting endangered and threatened wildlife and plants
(including proposed and candidate species), critical habitat, or
potential habitat for recovery pertaining to the Endangered Species Act.

\(E\) Fish and wildlife habitats of local, regional, State or Federal
importance on lands that provide or have the potential to provide
habitat value to species of Federal trust responsibility ( Migratory
Bird Treaty Act, Anadromous Fish Conservation Act).

\(F\) Aquifer recharge areas of local, regional, State or Federal
importance.

\(G\) Areas of high water quality or scenic value.

\(H\) Areas containing historic or cultural property; or

\(iii\) A predominance of land with special management importance. This
is land that meets the following criteria:

\(A\) Lands that are in holdings, lie adjacent to, or occur in proximity
to, Federally or State-owned lands.

## 48A

## (Revision 1)

## (08-24-88) SPECIAL PN 

RD Instruction 1955-C

§ 1955.139(c)(l)(iii) (Con.)

\(B\) Lands that would contribute to the regulation of ingress or egress
of persons or equipment to existing Federally or State-owned
conservation lands.

\(C\) Lands that would provide a necessary buffer to development if such
development would adversely affect the existing Federally or State-owned
lands.

\(D\) Lands that would contribute to boundary identification and control
of existing conservation lands.

\(2\) When a Federal or state agency requests title to inventory
property, the State Director will make a preliminary determination as to
whether the property can be transferred.

\(3\) If a decision is made by the State Executive Director to deny a
transfer request by a Federal or state agency, the requesting agency
will be informed of the decision in writing and informed that they may
request a review of the decision by the FSA Administrator.

\(4\) When a State or Federal agency requests title to inventory
property and the State Executive Director determines that the property
is suited for transfer, the following actions must be taken prior to
approval of the transfer:

\(i\) At least 2 public notices must be provided. These notices should
be published in a newspaper with a wide circulation in the area in which
the requested property is located. The notice should provide information
on the proposed use of the property by the requesting agency and request
any comments concerning the negative or positive aspects of the
request.\
A 30-day deadline should be established for the receipt of comments.

\(ii\) If requested, at least one public meeting must be held to discuss
the request. A representative of the requesting agency should be present
at the meeting in order to answer questions concerning the proposed
conservation use of the property. The date and time for a public meeting
should be advertised.

\(iii\) Written notice must be provided to the Governor of the state in
which the property is located as well as at least one elected official
of the county in which the property is located. The notification should
provide information on the request and solicit any comments regarding
the proposed transfer.

## 48B

## (Revision 1) 

RD Instruction 1955-C

§ 1955.139(c) (Con.)

\(5\) If the State Executive Director decides to submit the request to
the Administrator for approval, unless the State Executive Director has
been delegated approval authority in writing from the Administrator to
approve such transactions based on demonstrated capability and
experience in processing such transfers, the following information
regarding the request must be provided:

\(i\) Certification that the homestead protection rights as outlined in
Subpart S of part 1951 of this chapter, have expired.

\(ii\) Determination that the land is suitable or surplus and the
rationale for that determination.

\(iii\) A statement of the factual basis for determining the land to be
of marginal value for agricultural production, environmentally
sensitive, or having special management importance, with particular
discussion of any national benefits to be achieved (migratory bird and
wetland conservation).

\(iv\) Identification of the requesting agency and the recommended
conservation use if a transfer of inventory land were to occur.

\(v\) Views of the U.S. Fish and Wildlife Service relative to the need
for wetland and floodplain deed restrictions as required by § 1955.137
(a) of this Subpart. These deed restrictions must be in effect at the
time of transfer of inventory lands to any non-Federal entity. Transfer
to another Federal entity will only be considered where proper wetland
and floodplain conservation precautions have been agreed to by the
Federal entity.

\(vi\) An estimated value of the property to be transferred.

\(vii\) A completed copy of a preliminary hazardous waste site survey or
Transaction Screen Questionnaire.

\(6\) Determining priorities for transfer or inventory lands.

\(i\) A Federal entity will be selected over a State entity since the
transfer of inventory land involves Federally owned or administered
land.

## 48C

## (Revision 4)

## (08-24-88) SPECIAL PN 

RD Instruction 1955-C

§ 1955.139(c)(6) (Con.)

\(ii\) If two Federal agencies request the same land tract, priority
will be given to the Federal agency that owns or controls property
adjacent to the property in question or if this is not the case, to the
Federal agency whose mission or expertise best matches the conservation
purposes for which the transfer would be established.

\(iii\) In selecting between State agencies, priority will be given to
the State agency that owns or controls property adjacent to the property
in question or if that is not the case, to the State agency whose
mission or expertise best matches the conservation purposes for which
the transfer would be established.

\(7\) In cases where land transfer is requested for conservation
purposes that would contribute directly to the furtherance of
International Treaties or Plans (Migratory Bird Treaty Act or North
American Waterfowl Management Plan), to the recovery of a listed
endangered species, or to habitat of National importance (e.g., wetlands
as addressed in the Emergency Wetlands Resources Act), priority
consideration will be given to land transfer for conservation purposes,
without reimbursement, over other land disposal alternatives.

\(8\) An individual property may be subdivided into parcels and a parcel
can be transferred under the requirements of this paragraph as long as
the remaining parcels to be sold make up a viable sales unit, suitable
or surplus.

§ 1955.140 [Sale in parcels]{.underline}. (Revised 10-14-88, SPECIAL
PN.)

\(a\) [Individual property subdivided]{.underline}. An individual
property, other than Farm Credit Programs property, may be offered for
sale as a whole or subdivided into parcels as determined by the State
Director. For MFH property, guidance will be requested from the National
Office for all properties other than RHS projects. When farm inventory
property is larger than a family-size farm, the county official will
subdivide the property into one or more suitable farm tracts and the
suitable tracts will be sold to program applicants in accordance with §
1955.107 of this Subpart. Any remaining surplus property will be
disposed of in accordance with § 1955.108 of this Subpart. Division of
the land or separate sales of portions of the property, such as timber,
growing crops, inventory for small business enterprises, buildings,
facilities, and similar items may be permitted if a better total price
for the

## 48D

## (Revision 4) 

RD Instruction 1955-C

§ 1955.140(a) (Con.)

property can be obtained in this manner. The division of property must
not change its character from program/suitable to NP or surplus unless
authorized by the appropriate Assistant Administrator. Environmental
effects should also be considered pursuant to Subpart G of Part 1940.
Any applicable State laws will be set forth in a State Supplement and
will be complied with in connection with the division of land. If
property is to be subdivided, a plan will be provided by the State
Director protecting the Agency\'s security interest when the subdivided
portions are sold. The plan will provide for partial releases based upon
110 percent of the portion of the outstanding loan prorated to the
property released. Subdivision of acquired property will be reported on
Form RD 1955-3C, \"Acquired Property - Subdivision,\" in accordance with
the FMI. (Revised 06-28-95, PN 247.)

\(b\) [Grouping of individual properties]{.underline}. The County
Supervisor for FP cases, and the State Director for all other cases, may
authorize the combining of two or more individual properties into a
single parcel for sale as a suitable program property.

§ 1955.141 [Transferring title]{.underline}.

\(a\) [Real property]{.underline}. Real property will be conveyed by
Form RD 1955-49, or other form of nonwarranty deed approved by OGC,
executed by the State Director or duly designated Acting State Director.
This authority may not be redelegated except in Puerto Rico, where the
State Director may delegate this authority to a District Director. A
District Director in Puerto Rico may not redelegate this authority
except to a duly designated Acting District Director. The Agency or an
approved\
closing agent may prepare the granting instrument for real property. Any
Agency expenses involved will be paid in accordance with RD Instruction
2024-A). (Revised 08-13-92, SPECIAL PN.)

\(b\) [Chattel]{.underline}. Chattel property will be conveyed by Form
RD 1955-47, executed by the County Supervisor, District Director, or
State Director.

\(c\) [Additional real property documentation]{.underline}. For MFH
property, documentation will be in accordance with appropriate program
procedure. For SFH program real property sold to program applicants or
whenever required, the County Supervisor or District Director will also
provide the purchaser the following documents or statements:

## 48E

## (Revision 1)

## (08-24-88) SPECIAL PN 

RD Instruction 1955-C

§ 1955.141(c) (Con.)

\(1\) A termite certificate from a reliable firm.

\(2\) Local authority certification, if customary in the State, that the
individual water and/or sewage systems are functional and adequate for
property not being served by public water and/or sewer systems.

\(d\) [Rent increases for MFH property]{.underline}. After approval of a
credit sale for an occupied MFH project, but prior to closing, the
purchaser will prepare a realistic budget for project operation (and a
utility allowance, if applicable) to determine if a rent increase, may
be needed to continue or place project operations on a sound basis. 7
CFR part 3560, subpart E will be followed in processing the request for
a rent increase. In processing the rent increase, the purchaser will
have the same status as a borrower. An approved rent increase will be
effective on or after the date of closing. (Revised 02-24-05, SPECIAL
PN.)

\(e\) [Interest credit and rental assistance for MFH
property]{.underline}. Interest credit and rental assistance may be
granted to program applicants purchasing MFH properties in accordance
with the provisions of 7 CFR part 3560, Subpart F. (Revised 02-24-05,
SPECIAL PN.)

§ 1955.142 [Reporting sale]{.underline}.

When the transaction is closed and the conveying instrument has been
delivered, the appropriate Agency official will process Form RD
1955-50A,\
Form RD 1955-50B, \"Advice of Inventory Property Sold - Cash
Sale/Transfer - Acquired Property,\" or for MFH, Form RD 3560-19,
\"Status of REO Property,\" in accordance with the respective FMI. Real
or chattel property which has been disposed of by means other than sale,
including total loss or destruction, will be reported in the same
manner. (Revised 02-24-05, SPECIAL PN.)

§ 1955.143 [Report of inventory not sold]{.underline}.

Properties which are subject to a sale moratorium are excluded from this
requirement. Applicable property reports due in the National Office will
be grouped together and submitted simultaneously by the State Director
to the appropriate Assistant Administrator each March 31st and September
30th unless the servicing official determines that earlier guidance is
appropriate.

\(a\) [SFH properties]{.underline}. (Revised 2-15-89, PN 102.)

## 49

## (Revision 4)

(8-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.143(a) (Con.)

\(1\) [Program property]{.underline}. After the requirements of §
1955.114(a)(6) of this subpart are met, and the property has been
actively marketed for one year, a report will be submitted to the
Assistant Administrator, Housing. The submission will include the case
file, documentation of marketing efforts and a request to sell the
property by sealed bid or auction in accordance with § 1955.112(c) of
this subpart and/or provide a recommendation for future sales efforts.

\(2\) [NP property]{.underline}. After the requirements of §
1955.115(a)(1) of this subpart are met, and the property has been
actively marketed for nine months, a report will be submitted to the
Assistant Administrator, Housing. The submission will include the case
file, documentation of marketing efforts, and a recommendation for
future sales efforts.

\(b\) [Properties other than housing]{.underline}. For any real or
chattel property not sold within 18 months after acquisition (6 months
for chattel), the County Supervisor or District Director, as
appropriate, will send the case file, documentation of marketing efforts
and a recommendation for future sales efforts to the State Director for
review. The State Director or appropriate program official will review
the submission and provide any additional recommendations. If the
property is not sold within an additional 6 months (3 months for
chattels), the State Director will forward the case file, documentation
of marketing efforts, and a recommendation for future sales efforts to
the appropriate Assistant Administrator for guidance.

§ 1955.144 [Disposal of NP or surplus property to, through, or
acquisition from other Agencies]{.underline}.

\(a\) [Property which cannot be sold]{.underline}. If NP or surplus real
or chattel property cannot be sold (or only token offers are received
for it), the appropriate Assistant Administrator shall give
consideration to disposing of the property to other Federal Agencies or
State or local governmental entities through the General Services
Administration (GSA). Chattel property will be reported to GSA using
Standard Form 120, \"Report of Excess Personal Property,\" with transfer
documented by Standard Form 122, \"Transfer Order Excess Personal
Property.\" Real property will be reported to GSA using Standard Form
118, \"Report of Excess Real Property,\" Standard Form 118A,
\"Buildings, Structures, Utilities and Miscellaneous Facilities
(Schedule A),\" Standard Form 118B, \"Land (Schedule B)\" and Standard
Form 118C, \"Related Personal Property (Schedule C),\" with final
disposition documented by a \"Receiving Report,\" executed by the
recipient with original forwarded to the Finance Office and a copy
retained in the inventory file. Forms and preparation instructions will
be obtained from the appropriate GSA Regional Office by the State
Office. (Revised 06-28-95, PN 247.)

## 50

## (Revision 4) 

§1955.144 (Con.) RD Instruction 1955-C

\(b\) [Urban Homesteading Program (UH)]{.underline}. Section 810 of the
Housing and Community Development Act of 1979, as amended, authorizes
the Secretary of Housing and Urban Development (HUD) to pay for acquired
Rural Development single family residential properties sold through the
HUD-UH Program. Local governmental units may make application through
HUD to participate in the UH Program. State Directors will be notified
by the Assistant Administrator for Housing, when local governmental
units in their States have obtained funding for the UH Program. The
notification will provide specific guidance in accordance with the
\"Memorandum of Agreement between the Farmers Home Administration and
the Secretary of Housing and Urban Development\" dated October 2, 1981.
(See Exhibit C of this subpart.) A Local Urban Homesteading Agency
(LUHA) is authorized a 10 percent discount of the listed price on any
SFH nonprogram property for the UH Program. No discount is authorized on
program property. (Revised 03-08-90, SPECIAL PN.)

§1955.145 [Land acquisition to effect sale]{.underline}.

The State Director is authorized to acquire land which is necessary to
effect sale of inventory real property. This action must be considered
only on a case-by-case basis and may not be undertaken primarily to
increase the financial return to the Government through speculation. The
State Director\'s authority under this section may [not]{.underline} be
redelegated. For MFH and other organization-type loans, prior approval
must be obtained from the appropriate Assistant Administrator prior to
land acquisition.

\(a\) [Alternate site]{.underline}. Where real property has been
determined to be NP due to location and where it is economically
feasible to relocate the structure thereby making it a program property,
the State Director may authorize the acquisition of a suitable parcel of
land to relocate the structure if economically feasible. The remaining
NP parcel of land will be sold for its market value.

\(b\) [Additional land]{.underline}. Where real property has been
determined NP for reasons that may be cured by the acquisition of
adjacent land or an alternate site, in order to cure title defects or
encroachments or where structures have been built on the wrong land
[and]{.underline} where it is economically feasible, the State Director
may authorize the acquisition of additional land at a price not in
excess of its market value.

\(c\) [Easements or rights-of-way]{.underline}. The State Director may
authorize the acquisition of easements, rights-of-way or other interests
in land to cure title defects, encroachments or in order to make NP
property a program property, if economically feasible.

## 51

## (Revision 2)

(8-24-88) SPECIAL PN

RD Instruction 1955-C

§1955.146 [Advertising]{.underline}.

\(a\) [General]{.underline}. When property is being sold by Rural
Development or through real estate brokers, it is the servicing
official\'s responsibility to ensure adequate advertising of property to
achieve a timely sale. The primary means of advertisements are newspaper
advertisements in accordance with RD Instruction 2024-F (available in
Rural Development office), public notice using Form RD 1955-41, \"Notice
of Sale,\" and notification of known interested parties. Other
innovative means are encouraged, such as the use of a bulletin board to
display photographs of inventory properties for sale with a brief
synopsis of the property attached; posting Forms RD 1955-40 or RD
1955-43, as appropriate, in the reception area to attract applicant and
broker interest; posting notices of sale at employment centers;
door-to-door distribution of sales notices at apartment complexes; radio
and/or television spots; group meetings with potential
applicants/investors/ real estate brokers; and advertisements in
magazines and other periodicals. If Rural Development personnel are not
available to perform these services, Rural Development may contract for
such services in accordance with RD Instruction 2024-A (available in any
Rural Development Office).

\(b\) [Large-value and complex properties]{.underline}. Advertising for
MFH, B&I and other large-value or complex properties should also be
placed in appropriate newspapers and publications designed to reach the
type of particular purchasers most likely to be interested in the
inventory property. The State Director will assist the District Director
in determining the scope of advertising necessary to adequately market
these properties. Advertising for MFH and other complex properties must
also include appropriate language stressing the need to obtain and
submit complete application materials for the type program involved.

\(c\) [MFH restrictive-use provisions]{.underline}. Advertisements for
multi-family housing projects will advise prospective purchasers of any
restrictive-use requirements that will be attached to the project and
added to the title of the property. (Added 08-20-93, SPECIAL PN.)

\(d\) [Racial and socio-economic considerations]{.underline}. In
accordance with the policies set forth in {1901.203(c) of Subpart E of
Part 1901 of this chapter, the approval official will make a special
effort to insure that those prospective purchasers in the marketing area
who traditionally would not be expected to apply for housing assistance
because of existing racial or socio-economic patterns are reached.
(Renumbered 08-20-93, SPECIAL PN.)

## 52

## (Revision 2) 

§1955.146 (Con.) RD Instruction 1955-C

\(e\) [Rejected application for SFH loan]{.underline}. If an application
for a SFH loan is being rejected because income is too high, a statement
should be included in the rejection letter that inventory properties may
be available for which they may apply. (Renumbered 08-20-93, SPECIAL
PN.)

§1955.147 [Sealed bid sales]{.underline}.

This section provides guidance on the sale of all Rural Development
inventory property, except suitable FP real property which will not be
sold by sealed bid. Before a sealed bid sale, the State Director will
determine and document the minimum sale price acceptable. In determining
a minimum sale price, the State Director will consider the length of
time the property has been in inventory, previous marketing efforts, the
type property involved, and potential purchasers. Program financing will
be offered on sales of program and suitable property. For NP or surplus
property, credit may be extended to facilitate the sale. When a group of
properties is to be sold at one time, advertising may indicate that
Rural Development will consider bids on an individual property or a
group of properties and Rural Development will accept the bid or bids
which are in the best financial interest of the Government. Credit,
however, may not exceed the market value of the property nor may the
term exceed the period for which the property will serve as adequate

## 52A

## (Added 08-20-93, SPECIAL PN)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.147 (Con.)

security. Sealed bids will be made on Form RD 1955-46 with any
accompanying deposit in the form of cashier\'s check, certified check,
postal or bank money order or bank draft payable to the Agency. For
program and suitable property, the minimum deposit will be the same as
outlined in § 1955.130(e)(1) of this Subpart. For NP or surplus
property, the minimum deposit will be ten percent (10%). The bid will be
considered delivered when actually received at the Agency office. All
bids will be date and time stamped. Advertisements and notices will
request bidders to submit their bid in a sealed envelope marked as
follows: \"SEALED BID OFFER [\*]{.underline} .\" (\*Insert \"PROPERTY
IDENTIFICATION NUMBER\"). (Revised 03-08-90, SPECIAL PN.)

\(a\) [Opening bids]{.underline}. Sealed bids will be held in a secured
file before bid opening which will be at the place and time specified in
the notice. The bid opening will be public and usually held at the
Agency office. The County Supervisor, District Director, or State
Director or his/her designee will open the bids with at least one other
Agency employee present. Each bid received will be tabulated showing the
name and address of the bidder, the amount of the bid, the amount and
form of deposit, any conditions of the bid. The tabulation will be
signed by the County Supervisor, District Director or State Director or
his/her designee and retained in the inventory file.

\(b\) [Successful bids]{.underline}. The highest complying bid meeting
the minimum established price will be accepted by the approval official;
however, it will be subject to loan approval by the appropriate official
when a credit sale is involved. For SFH and FP (surplus property) sales,
preference will be given to a cash offer on NP or surplus property sales
which is at least [\*]{.underline} percent of the highest offer
requiring credit \[\*Refer to Exhibit B of RD Instruction 440.1 for the
current percentage.\] Otherwise, equal bids will be accepted by public
lot drawing. For program or suitable property sales, no preference will
be given to program purchasers unless two identical high bids are
received, in which case the bid from the program purchaser will receive
preference. If a bid is received from any purchaser with a request for
credit that (considering any deposit) exceeds the market value of the
property or requests a term which exceeds the period for which the
property will serve as adequate security, the bidder will be given the
opportunity to reduce the credit request and/or term with no
accompanying change in the offered price.

\(c\) [Unsuccessful bids]{.underline}. Deposits of unsuccessful bidders
will be returned by certified mail with letter of explanation, return
receipt requested. If there were no acceptable bids, the letter will
advise each bidder of any anticipated negotiations for the sale of the
property and deposits will be returned.

## 53

## (Revision 3)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.147 (Con.)

\(d\) [Disqualified bids]{.underline}. Any bid that does not comply with
the terms of the otter will be disqualified. Minor deviations and
defects in bid submission may be waived by the Agency official approving
the sale.

\(e\) [Failure to close]{.underline}. If a successful bidder fails to
perform under the terms of the offer, the bid deposit will be retained
as full liquidated damages and will be remitted according to RD
Instruction 1951-B for application to the General Fund. However, if a
credit sale complying with the Agency notice is an element of the offer
and the Agency disapproves the credit application, then the bid deposit
will be returned to the otherwise successful bidder. Upon determination
that the successful bidder will not close, the State Director or State
Executive Director may authorize either another sealed bid or auction
sale or direct negotiations with the next highest bidder, all available
unsuccessful bidders, or other interested parties.

\(f\) [No acceptable bid]{.underline}. Where no acceptable bid is
received although adequate competition is evident, the State Director
may authorize a negotiated sale in accordance with § 1955.108(d) of this
Subpart. (Revised 02-15-89, PN 102.)

§ 1955.148 [Auction sales]{.underline}. (Revised 08-20-97, PN 280.)

This section provides guidance on the sale of all inventory property by
auction, except FSA real property. Before an auction, the State
Director, with the advice of the National Office for organizational
property, will determine and document the minimum sale price acceptable.
In determining a minimum sale price, the State Director will consider
the length of time the property has been in inventory, previous
marketing efforts, the type property involved, and potential purchasers.
Program financing will be offered on sales of program and property. For
NP and property, credit may be offered to facilitate the sale. Credit,
however, may not exceed the market value of the property nor may the
term exceed the period for which the property will serve as adequate
security. For program property sales, no preference will be given to
program purchasers. The State Director will also consider whether an
Agency employee will conduct an auction or whether the services of a
professional auctioneer are necessary due to the complexity of the sale.
When the services of a professional auctioneer are advisable, the
services will be procured by contract in accordance with RD Instruction
2024-A (available in any Agency Office). Chattel property may be sold at
public auction that is widely advertised and held on a regularly
scheduled basis without solicitation. Form RD 1955-46 will be used for
auction sales. At the auction, successful bidders will be required to
make a bid deposit. For program and suitable property, the bid deposit
will be the same as outlined in § 1955.130(e)(1) of this Subpart. For NP
property sales, a bid deposit of 10 percent is required. Deposits will
be in the form of cashier\'s check, certified check, postal or bank
money order or bank draft payable to the Agency, cash or personal checks
may be accepted when deemed necessary for a

## 54

## (Revision 3) 

RD Instruction 1955-C

§ 1955.148 (Con.)

successful auction by the person conducting the auction. Where credit
sales are authorized, all notices and publicity should provide for a
method of prior approval of credit and the credit limit for potential
purchasers. This may include submission of letters of credit or
financial statements prior to the auction. The auctioneer should not
accept a bid which requests credit in excess of the market value. When
the highest bid is lower than the minimum amount acceptable to the
Agency, negotiations should be conducted with the highest bidder or in
turn, the next highest bidder or other persons to obtain an executed bid
at the predetermined minimum. Upon purchaser\'s default, the approval
official will remit the bid deposit as a Miscellaneous Collection
according to RD Instruction 1951-B. The bid deposit will be remitted
only when the bidder defaults; otherwise it will be used at closing
towards a downpayment or closing costs, as applicable. The closing will
be conducted in accordance with the procedures prescribed in this
Subpart for the type property and program involved.

§ 1955.149 [Exception authority]{.underline}.

\(a\) The Administrator may, in individual cases, make an exception to
any requirement or provision of this Subpart or address any omission of
this subpart which is not inconsistent with the authorizing statute or
other applicable law if the Administrator determines that the
Government\'s interest would be adversely affected or the immediate
health and/or safety of tenants or the community are endangered if there
is no adverse effect on the Government\'s interest. The Administrator
will exercise this authority upon request of the State Director with
recommendation of the appropriate program Assistant Administrator or
upon request initiated by the appropriate program Assistant
Administrator. Requests for exceptions must be made in writing and
supported with documentation to explain the adverse effect, propose
alternative courses of action, and show how the adverse effect will be
eliminated or minimized if the exception is granted.

\(b\) The Administrator may authorize withholding sale of surplus farm
inventory property temporarily upon making a determination that sales
would likely depress real estate market and preclude obtaining at that
time the best price for land.

## 55

## (Revision 3)

(08-24-88) SPECIAL PN

RD Instruction 1955-C

§ 1955.150 [State Supplements]{.underline}.

State Supplements will be prepared with the assistance of OGC as
necessary to comply with State laws or only as specifically authorized
in this Instruction to provide guidance to Agency officials. State
Supplements applicable to MFH, B&I, and CP must have prior approval of
the National Office. Request for approval for those affecting MFH must
include complete justification, citations of State Law, and an opinion
from OGC.

Attachments: Exhibits A, B, C, D, E, G, H, and I.

## oOo

## 56

## (Added 08-20-97, PN 280) 

RD Instruction 1955-C

Exhibit A

NOTICE OF FLOOD, MUDSLIDE HAZARD OR WETLAND AREA

TO: DATE:

This is to notify you that the real property located at
\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_is
in a floodplain, wetland or area identified by the Federal Insurance
Administration of the Federal Emergency Management Agency as having
special flood or mudslide hazards. This identification means that the
area has at least one percent chance of being flooded or affected by
mudslide in any given year. For floodplains and wetlands on the
property, restrictions are being imposed. Specific designation(s) of
this property is (are) (special flood) (mudslide hazard) (wetland)\*.
The following restriction(s) on the use of the property will be included
in the conveyance and shall apply to the purchasers, purchaser\'s heirs,
assigns and successors and shall be construed as both a covenant running
with the property and as equitable servitude subject to release by Rural
Development when/if no longer applicable:

## (INSERT RESTRICTIONS)

Rural Development will increase the number of acres placed under
easement, if requested in writing, provided that the request is
supported by a technical recommendation of the U.S. Fish and Wildlife
Service (FWS). Where additional acreage is accepted by Rural Development
for conservation easement, the purchase price of the inventory farm will
be adjusted accordingly.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(County Supervisor, District Director or Real Estate Broker)

[ACKNOWLEDGEMENT]{.underline} [DATE]{.underline}: \_\_\_\_\_\_\_\_\_\_\_

I hereby acknowledge receipt of the notice that the above stated real
property is in a (special flood) (mudslide hazard) (wetland)\* area and
is subject to use restrictions as above cited. \[Also, if I purchase the
property through a credit sale, I agree to insure the property against
loss from (floods) (mudslide)\* in accordance with requirements of the
Farmers Home Administration.\]

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Prospective Purchaser)

\* Delete the hazard that does not apply.

o0o

(07-17-92) SPECIAL PN

Exhibit B in PDF ONLY.

Exhibit C in PDF ONLY.

Exhibit D in PDF ONLY.

RD Instruction 1955-C

Exhibit E

(Name and Address of Offeror)

Date:

RE: (Insert address of inventory property)

Dear

Reference is hereby made to your offer to purchase the above referenced
Rural Development inventory property. Please be advised that:

\_\_\_\_\_ 1. Your offer has been accepted. Please contact this office
to\
discuss proceeding with the transaction.

\_\_\_\_\_ 2. Another offer has been accepted, however, your offer is\
being held as a back-up offer.

\_\_\_\_\_ 3. Per the listing notice, the property is reserved for\
purchase by program applicants for the first 45 days after\
listing or by any reduction in price. Your offer will be\
considered after this 45-day period if no acceptable offer\
from a program applicant is received.

\_\_\_\_\_ 4. Your offer could not be accepted for the following\
reason(s):

\_\_\_\_\_Less than the listed sale price.

\_\_\_\_\_An offer from a program applicant has been accepted.

\_\_\_\_\_Another offer has already been accepted.

\_\_\_\_\_The property is no longer for sale.

\_\_\_\_\_(For back-up offers) The prior offer has been accepted.

\_\_\_\_\_

\_\_\_\_\_ 5. The property has been withdrawn from sale.

\_\_\_\_\_ 6. A previous accepted offer has been cancelled. The
property\
has been relisted for sale.

\_\_\_\_\_ 7. The has been relisted for sale at the following

term: Price \$\_\_\_\_\_\_\_\_\_\_\_
Terms:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

\_\_\_\_\_ 8.
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Please feel free to contact this office should you have any questions
regarding this letter. Thank you for your interest in purchasing Rural
Development inventory property.

Sincerely

COUNTY SUPERVISOR

(8-24-88) SPECIAL PN

RD Instruction 1955-C

Exhibit G

Page 1

## FACT SHEET

RURAL DEVELOPMENT SFH INVENTORY PROPERTY FOR USE IN THE HUD HOPE 3
PROGRAM

On November 5, 1991, Rural Development entered into a Memorandum of
Understanding with the Department of Housing and Urban Development (HUD)
to coordinate the use of Rural Development Single Family Housing (SFH)
inventory properties for the benefit of Participants in the HUD\
HOPE 3 Program.

[BACKGROUND]{.underline}

Rural Development has SFH properties in inventory as a result of
liquidation of its loan security. Inventory properties which meet Rural
Development program standards are repaired and sold, preferably to
program applicants on program credit terms. Nonprogram properties are
broom cleaned and sold for cash or on nonprogram credit terms.

HUD, through the HOPE 3 program, provides homeownership opportunities
for low income families and individuals (Participants) by providing
grantees (Grantees) with Federal assistance to initially acquire and
rehabilitate government owned properties. Grantees acquire SFH
properties from government agencies and sell them to Participants at
affordable prices, after making needed repairs. Alternatively, Grantees
can facilitate direct acquisition and repair of housing by Participants
by providing financing, funds for down payments, repairs and/or
subsidized interest rates.

[Rural Development RESPONSIBILITIES]{.underline}

1\. Upon request, Rural Development will provide to Grantees lists of
all SFH properties in inventory in the grantees\' areas of interest.

2\. Rural Development will consider written offers from Grantees, for
themselves or a Participant, to be closed within 30 days of receipt of a
written offer or completion of repairs made by Rural Development.
Repairs will normally be completed within 60 days of the decision to
make repairs.

3\. Whether or not the property was listed for sale, Rural Development
will give preference to offers from Grantees and Participants for
inventory sales.

4\. If Rural Development has listed the property for sale, the listing
will be withdrawn when the written offer from a Grantee, for itself or
on behalf of a participant, is received by Rural Development. Rural
Development will not pay a sales commissions for properties sold to
Participants or Grantees.

5\. Rural Development will sell properties to Grantees or Participants
with a 10 percent price discount of the current market value of the
listed price whichever is less.

(07-29-92) PN 189

RD Instruction 1955-C

Exhibit G

Page 2

6\. If Rural Development contracts for repairs have not been awarded,
repairs will not be made, except for decent, safe and sanitary (DSS)
requirements. Rural Development will repair properties to meet Rural
Development DSS standards if the value of the property increases more
than the cost of repairs. Otherwise, Rural Development will sell
properties with the DSS deed restrictions. Grantees are responsible for
meeting DSS conditions and having the deed restrictions removed before
Participants occupy the dwelling.

7\. Rural Development may sell program properties to Participants with
Rural Development program financing and 33 year terms or nonprogram
properties to Participants with Rural Development nonprogram financing
and 30 year terms. The buyer must meet all other Rural Development
eligibility requirements. No down payment is required.

8\. Rural Development may sell program or nonprogram properties to
Grantees or Participants for cash.

9\. Rural Development will close the sale within 30 days of receipt of
the written offer or completion of repairs made by Rural Development. If
Grantee or Participant cannot close within 30 days, Rural Development
will reject the offer.

[HUD HOPE 3 GRANTEE AND PARTICIPANT\'S RESPONSIBILITIES]{.underline}

1\. Grantee will operate the HOPE 3 Program in accordance with HUD
regulations.

2\. Grantee will request list of SFH inventory properties from Rural
Development County or State Office for the areas of interest.

3\. Grantee will submit to Rural Development County Office a written
offer for each property it wants to buy for itself or it wants to assist
a Participant in buying.

4\. Grantee will repair or assist Participant in repairing the property,
and, if there is a DSS clause, will request Rural Development to remove
the DSS clause from the deed after repairs are made and before the
property is occupied.

5\. Grantee will close, or assist the Participant in closing, the sale
within 30 days of written offer or completion of repairs done by Rural
Development. Grantee may provide all or part of the purchase price to
reduce the amount of Rural Development loan needed.

## oOo 

RD Instruction 1955-C

Exhibit H

Page 1

CONSERVATION EASEMENT FOR WETLANDS

*\[Use this exhibit to establish easements on wetlands with full
restrictive conditions (including adjacent nonwetland buffers).\]*

**CONSERVATION EASEMENT RESERVATIONS IN THE UNITED STATES**

By this instrument there is reserved in the UNITED STATES OF AMERICA,
its successors and assigns, a perpetual conservation easement on the
property conveyed by this deed.

This easement is under the authority and in furtherance of the
provisions of federal law, including sections 331 and 335 of the
Consolidated Farm and Rural Development Act (7 U.S.C. 1981 and 1985) as
amended. The restrictions and covenants contained in this easement
constitute a perpetual servitude on and run with the property. The
Grantee and all successors and assigns (\"landowner\") under this deed
covenant with the United States to do or refrain from doing, severally
and collectively, the various acts mentioned later in this easement. The
United States is reserved the rights enumerated in this easement for
itself and its successors, agents and assigns.

I. DESCRIPTION OF THE EASEMENT AREA.

The area subject to this Conservation Easement, referred to herein as
the \"easement area\" is described as follows:

\[legal description, or reference to appended plat. In certain cases, a
specific route on and across the easement area for landowner access to
other portions of the property for farming or other uses may be
designated if such access is not reasonably available from other routes
outside the easement area.\]

Without limiting the general and specific rights of access in paragraph
III‑A, for access to the easement area, a right of way for an
\[existing\] \[road, trail, etc\] over the property conveyed by this
deed as follows:

\[legal description ‑‑ center line survey, P‑line survey or reference to
other location of the road or path, or reference to appended plat or
drawing\].

(08-20-97) PN 280

RD Instruction 1955-C

Exhibit H

Page 2

The above right of way shall be sufficiently wide (not to exceed
[\_\_\_]{.underline} feet) to accommodate access by vehicles and
equipment deemed necessary or desirable by the easement manager for
easement management. \[Any costs associated with road construction and
maintenance shall be shared by the landowner and, subject to the
availability of funds, the easement manager commensurate with their
respective levels of use.\][^1] In the event that the location of a road
or trail becomes impractical due to erosion, Acts of God, or other
cause, said location can be reasonably adjusted to accommodate access in
accordance with the rights of paragraph III‑A herein.

II\. COVENANTS BY THE LANDOWNER.

A. No dwellings, barns, outbuildings or other structures shall be built
within the easement area.

B. The vegetation or hydrology of the described easement area will not
be altered in any way or by any means or activity on the property
conveyed by this deed, or property owned by or under the control of the
landowner including: (1) cutting or mowing; (2) cultivation; \[(3)
grazing;\] (4) harvesting wood products; (5) burning; (6) placing of
refuse, wastes, sewage, or other debris; (7) draining, dredging,
channeling, filling, dicing, pumping, diking, impounding and related
activities; or (8) diverting the natural flow of surface or the
underground waters into, within, or out of the easement area.

C. Notwithstanding the provisions of paragraph II‑B above, the landowner
shall be responsible for compliance with all Federal, state and local
laws forthe control of noxious or other undesirable plants on the
easement area. The responsibility for such plant control may be assumed
in writing by the easement manager where the control or manipulation of
such plants is deemed by the easement manager to affect easement
management programs or policies.

\[D. Cattle or other stock shall not be permitted on the easement area,
except that the easement manager shall permit access to and use of
waters within the area necessary for stock watering under such terms and
conditions as the easement manager deems necessary to protect and
further the purposes of this easement, provided:

\(1\) The easement manager bears the costs of building and maintaining
fencing or other facilities necessary to preclude stock from entering
the easement area;

\(2\) the easement manager shall consult with the landowner to determine
the need for and the scope of fencing; and

RD Instruction 1955-C

Exhibit H

Page 3

\(3\) access for stock watering need not be permitted where other waters
are reasonably available from other sources outside the easement
area.\][^2]

III\. RIGHTS RESERVED IN THE UNITED STATES.

The United States, on behalf of itself its successors or assigns,
reserves and retains the right, at its sole discretion, to manage the
easement area including the following authorities:

A. The right of reasonable ingress and egress on and across the property
conveyed by this deed as of the date of this instrument, whether or not
adjacent or appurtenant to the easement area, for access to the easement
area in order to conduct wetlands management, monitoring, and easement
enforcement activities. The easement manager may utilize vehicles and
other reasonable modes of transportation for access purposes overland or
on any right of way described in paragraph I. In the event that the use
of the described access right of way over the property conveyed by this
deed is not practical for any reason, the easement manager may utilize
any convenient route of access to the easement area over said property.
With the concurrence of the easement manager, the landowner may provide
a designated route for such access to and from the easement area so that
damage to farm operations can be reasonably avoided.

B. The right but not the obligation to install, operate, and maintain
structures for the purpose of reestablishing, protecting, and enhancing
wetlands functional values including the taking of construction
materials to and from said sites.

C. The right to establish or re‑establish vegetation through seedings,
plantings, or natural succession.

D. The right but not the obligation to manipulate vegetation, topography
and hydrology on the easement area through diking, pumping, water
management, excavating, island construction, burning, cutting, pesticide
application, fertilizing, and other appropriate practices. The easement
manager shall consult with the landowner prior to any such manipulatory
action occurring in order to determine the most appropriate method to
avoid possible damage to the property(s) adjoining the easement area.

E. The right to conduct predator management activities.

(08-20-97) PN 280

RD Instruction 1955-C

Exhibit H

Page 4

F. \[The right but not the obligation to construct and maintain fences
in order to prevent or regulate grazing or other type of encroachment on
the easement area.\][^3]

G. \[Notwithstanding permissive provisions of State or Federal law, the
right to prohibit or regulate hunting or fishing or other taking of
migratory birds, fish and wildlife. This right to prohibit any of these
activities shall be effected by (1) the easement manager posting the
area, or (2) otherwise giving notice of the prohibitions to the
landowner.\][^4]

H. \[The right to exclude landowner and/or public entry, if such entry
is deemed to pose a threat to fish and wildlife or their habitat.\][^5]

IV\. EASEMENT MANAGEMENT AND ADMINISTRATION.

\[Provision to be used where a Federal agency (other than U.S. Fish and
Wildlife Service) or a state fish and wildlife agency is the easement
manager.\]

A. This easement shall be managed and administered by \[name agency\]
which may be referred to as the \"easement manager.\"

B. For purposes of management and administration of this easement,
except as provided in paragraph V-H, all rights of the United States in
this easement are assigned to the easement manager. The easement manager
may enforce all terms and conditions of this easement, along with all
rights and powers reserved in this easement through such general or
specific regulations or orders as have been or may, from time to time,
be promulgated under its general governmental authorities.

RD Instruction 1955-C

Exhibit H

Page 5

IV\. EASEMENT MANAGEMENT AND ADMINISTRATION.

\[Provision to be used for management by the U.S. Fish & Wildlife
Service.\]

A. All right, title and interests of the United States in this easement
are assigned to the Secretary of the Interior for administration by the
United States Fish and Wildlife Service as part of the National Wildlife
Refuge System pursuant to the National Wildlife Refuge System
Administration Act, 16 U.S.C. 668dd et seq. The U.S. Fish and Wildlife
Service may enforce all the terms and conditions of this easement, along
with exercising all rights and powers reserved in this easement through
such general or specific regulations or orders as have been or may be,
from time to time, promulgated under the authority of the Secretary of
the Interior. Notwithstanding the above rights in paragraph III retained
by the United States, the U.S. Fish and Wildlife Service may permit the
landowner to pursue such activities on said sites as would be consistent
with the preservation and enhancement of wetlands functional values.

B. As used in this easement, the term \"easement manager\" shall refer
to the authorized official of the U.S. Fish and Wildlife Service.

V. GENERAL PROVISIONS.

A. The agreed upon purposes of this reservation are the protection and
restoration of the wetland areas existing as of the date of this
conveyance as well as protection and enhancement of plant and animal
habitat and populations. A \"wetland\" is defined and determined by the
Natural Resources Conservation Service of the U.S. Department of
Agriculture in accordance with Title XII of the Food Security Act of
1985 (16 U.S.C. 3801 et. seq.). Any ambiguities in this easement shall
be construed in a manner which best effectuates wetland protection and
restoration and fish and wildlife purposes.

B. Any subsequent amendment to or repeal of any federal law or
regulations which authorizes this reservation shall not affect the
rights reserved by the United States or subsequently held by its
successors or assigns.

C. For purposes of this easement, wetland management rights reserved by
the United States include, but are not limited to, inspection for
compliance with the terms of this easement; research regarding water,
wetlands, fish and wildlife and associated ecology; and any other
activity consistent with the preservation and enhancement of wetland
functional values.

(08-20-97) PN 280

RD Instruction 1955-C

Exhibit H

Page 6

D. The United States, its successors and assigns, including the easement
manager, shall have the right to make surveys, take photographs and
prepare such other documentation as may be necessary or desirable to
administer the provisions of this easement. Any such map, plat or other
suitable document may be recorded in the land recorded of the respective
county in which the property is located.

E. The easement reservation does not authorize public entry upon or use
of land. \[Unless the easement manager prohibits public entry, the
landowner may permit it at the landowner\'s discretion.\][^6]

F. \[Subject to paragraph III‑G in this easement,\][^7] The landowner
and invitees may hunt and fish on the easement area in accordance with
all federal, state, and local game and fishery regulations.

G. This easement shall be binding on the landowner, and the landowner\'s
heirs, successors or assigns. The landowner covenants to warrant and
defend unto the United States, its successors or assigns, the quiet and
peaceable use and enjoyment of the land and interests in the land
constituting this reservation against all claims and demands.

H. The easement manager shall be the agent of the United States or its
successors or assigns. The easement manager shall have all discretionary
powers of the United States under this easement, except that the power
to release or modify, in any manner, the terms of this easement may be
exercised only by a designated employee of the United States Department
of Agriculture. Any such succession or assignment of authority must be
by express written language, and no power to modify or release all or
part of the easement may be inferred from or implied by the conduct of
any individual, entity or governmental entity. In the performance of any
rights of the easement manager under this easement, the easement manager
may permit, contract or otherwise provide for action by employees,
agents, or assigns which may include the landowner.

\[VI. STATE OR LOCAL REQUIREMENTS.\]

\[Insert any State or local wetland protection requirements that are
more restrictive than those contained in the preceding paragraphs.\]

oOo

RD Instruction 1955-C

Exhibit I

## 

## 

## CONSERVATION EASEMENT FOR FLOODPLAINS

*\[Use only for floodplains (no wetlands)\]*

Conservation Easement Reservations in the United States

By this instrument there is reserved in the UNITED STATES OF AMERICA,
its successors and assigns, a perpetual conservation easement on the
property conveyed by this deed.

This easement is under the authority and in furtherance of the
provisions of federal law, including sections 331 and 335 of the
Consolidated Farm and Rural Development Act (7 U.S.C. 1981 and 1985) as
amended, and Executive Order 11988 providing for the protection of
floodplains. The restrictions and covenants contained in this easement
constitutes a perpetual servitude on and run with the property. The
grantee and all successors and assigns (\"landowner\") under this deed
covenant with the United States to do or refrain from doing, severally
and collectively, the various acts mentioned later in this easement. The
United States is reserved the rights enumerated in this easement for
itself and its successors, agents and assigns.

I. DESCRIPTION OF THE EASEMENT AREA AND ACCESS THERETO:

The area subject to this Conservation Easement, referred to herein as
the \"easement area\" is described as follows:

\[legal description, or reference to appended plat\]

Without limiting the general and specific rights of access in paragraph
III‑A, for access to the easement area, a right of way for an
\[existing\] \[road, trail, etc.\] over the property conveyed by this
deed as follows:

\[legal description ‑‑ center line survey, P‑line survey or reference to
other location of the road or path, or reference to appended plat or
drawing\]

The above right of way shall be sufficiently wide (not to exceed \_\_
feet) to accommodate access by vehicles and equipment deemed necessary
or desirable by the easement manager for easement management. \[Any
costs associated with road construction and maintenance shall be shared
by the landowner and, subject to the availability of funds, the easement
manager commensurate with their respective levels of use.\] In the event
that the location of a road

(08-20-97) PN 280

RD Instruction 1955-C

Exhibit I

Page 2

or trail becomes impractical due to erosion, Acts of God, or other
cause, said location can be reasonably adjusted to accommodate access in
accordance with the rights of paragraph III‑A herein.

II\. COVENANTS BY THE LANDOWNER.

A. No dwellings, barns, outbuildings, or other structures shall be built
within the easement area when the easement manager determines, in
consultation with the landowner, that a practicable alternative location
outside the easement area is available to the landowner. Also, no
dwellings, barns, outbuildings, or other structures shall be built
within the easement area unless the construction conforms, at minimum,
to the requirements of the National Flood Insurance Program (NFIP).
Repairs to existing structures within the easement area may be made
subject to the NFIP. The construction of fences needed for the purpose
of livestock retention will be permitted within the easement area
provided they do not impede the flow of water.

B. The vegetation or hydrology of the described easement area will not
be altered in any way or by any means or activity on the property
conveyed by this deed, or property owned by or under the control of the
landowner, including: (1) placing earthen or other material fill on the
easement area, or (2) placing of refuse, wastes, sewage, or other
debris. This restriction does not apply to application of agricultural
chemicals in accordance with Environmental Protection Agency Use
Restrictions, except that application of agricultural chemicals within
100 feet of a stream or river is prohibited. The landowner shall have
the right to carry on farming practices such as grazing, hay cutting,
plowing, working and cropping the easement area without further
degradation of floodplain values.

C. Notwithstanding the provisions of paragraph II‑B above, the landowner
shall be responsible for compliance with all federal, state and local
laws for the control of noxious or other undesirable plants on the
easement area.

D. Notwithstanding the provisions of paragraph II‑B above, the landowner
may establish or repair stream‑bank riprap if such actions are necessary
to protect the integrity of fields or buildings and provided such riprap
is performed in consultation with the easement manager and under the
direction of appropriate Federal, State, and local authorities.

RD Instruction 1955-C

Exhibit I

Page 3

III\. RIGHTS RESERVED IN THE UNITED STATES.

The United States, on behalf of itself, its successors or assigns,
reserves and retains the right, at its sole discretion, to manage the
easement area including the following authorities:

A. The right of reasonable ingress and egress on and across the property
conveyed by this deed as of the date of this instrument, whether or not
adjacent or appurtenant to the easement area, for access to the easement
area in order to conduct floodplains management, monitoring, and
easement enforcement activities. The easement manager may utilize
vehicles and other reasonable modes of transportation for access
purposes overland or on any right of way described in paragraph I.

B. In the event that the use of the described access right of way over
the property conveyed by this deed is not practical for any reason, the
easement manager may utilize any convenient route of access to the
easement area over said property. With the concurrence of the easement
manager, the landowner may provide a designated route for such access to
and from the easement area so that damage to farm operations can be
reasonably avoided.

IV\. EASEMENT MANAGEMENT AND ADMINISTRATION.

\[Provision to be used where a Federal agency (other than U.S. Fish and
Wildlife Service) or a State fish and wildlife agency is the easement
manager.\]

A. This easement shall be managed and administered by (name agency\]
which may be referred to as the \"easement manager.\"

B. For purposes of management and administration of this easement,
except as provided in paragraph V-H all rights of the United States in
this easement are assigned to the easement manager. The easement manager
may enforce all the terms and conditions of this easement, along with
all rights and powers reserved in this easement through such general or
specific regulations or orders as have been or may be, from time to
time, promulgated under its general governmental authorities.

(08-20-97) PN 280

RD Instruction 1955-C

Exhibit I

Page 4

IV\. EASEMENT MANAGEMENT AND ADMINISTRATION.

\[Provision to be used for management by the U.S. Fish & Wildlife
Service.\]

A. All rights, title and interests of the United States in this easement
are assigned to the Secretary of the Interior for administration by the
United States Fish and Wildlife Service as part of the National Wildlife
Refuge System pursuant to the National Wildlife Refuge System
Administration Act, 16 U.S.C. 668dd et seq. The U.S. Fish and Wildlife
Service may enforce all the terms and conditions of this easement, along
with exercising all rights and powers reserved in this easement through
such general or specific regulations or orders as have been or may be,
from time to time, promulgated under the authority of the Secretary of
the Interior. Notwithstanding the above rights in paragraph III retained
by the United States, the U.S. Fish and Wildlife Service may permit the
landowner to pursue such activities on said sites as would be consistent
with the preservation and enhancement of floodplain functional values.

B. As used in this easement, the term \"easement manager\" shall refer
to the authorized official of the U.S. Fish and Wildlife Service.

V. GENERAL PROVISIONS.

A. The agreed upon purposes of this reservation are the protection and
restoration of the floodplain areas existing as of the date of this
conveyance as well as protection and enhancement of plant and animal
habitat and populations. A \"floodplain\" is defined by reference to
section 6(c) of Executive Order 11988. Any ambiguities in this easement
shall be construed in a manner which best effectuates floodplain
protection and restoration and fish and wildlife purposes.

B. Any subsequent amendment to or repeal of any Federal law, or
regulations which authorizes this reservation shall not affect the
rights reserved by the United States or subsequently held by its
successors or assigns.

C. For purposes of this easement, floodplain management rights reserved
by the United States include, but are not limited to, inspection for
compliance with the terms of this easement; research regarding water,
wetlands, fish and wildlife and associated ecology; and any other
activity consistent with the preservation and enhancement of floodplain
values.

RD Instruction 1955-C

Exhibit I

Page 5

D. The United States, its successors and assigns, including the easement
manager, shall have the right to make surveys, take photographs and
prepare such other documentation as may be necessary or desirable to
administer the provisions of this easement. Any such map, plat or other
suitable document may be recorded in the land records of the respective
county in which the property is located.

E. The easement reservation does not authorize public entry upon or use
of land.

F. The landowner and invitees may hunt and fish on the easement area in
accordance with all federal, state, and local game and fishery
regulations.

C. This easement shall be binding on the landowner, and the landowner\'s
heirs, successors or assigns. The landowner covenants to warrant and
defend unto the United States, its successors or assigns, the quiet and
peaceable use and enjoyment of the land and interests in the land
constituting this reservation against all claims and demands.

H. The easement manager shall be the agent of the United States or its
successors and assigns. The easement manager shall have all
discretionary powers of the United States under this easement except
that the power to release or modify, in any manner, the terms of this
easement may be exercised only by a designated employee of the United
States Department of Agriculture. Any such succession or assignment of
authority must be by express written language, and no power to modify or
release all or part of the easement may be inferred from or implied by
the conduct of any individual, or governmental entity. In the
performance of any rights of the easement manager under this easement,
the easement manager may permit, contract or otherwise provide for
action by employees, agents, or assigns which may include the landowner.

\[VI. STATE AND/OR LOCAL REQUIREMENTS.\]

\[Insert any State and/or local floodplain protection requirements that
are more restrictive than those contained in the preceding paragraphs.\]

## oOo

(08-20-97) PN 280

[^1]: ^    ?^ Use when access to the easement area is over road or
    roadway that will be constructed or require maintenance.

[^2]: ^    ?^ Use only when paragraph III-F is used.

[^3]: ^    ?^ Use only if the easement manager intends to fence the
    easement area or a portion of the easement area.

[^4]: ^    ?^ Use only when this is a necessary precondition for the
    easement manager to accept the easement.

[^5]: ^    ?^ Use only when FWS recommend, with recommendation based
    upon severe existing or potential threat to fish and wildlife.

[^6]: ^    ?^ Use this sentence whenever paragraph III. H is used.

[^7]: ^    ?^ Use this introductory phrase whenever paragraph III. G is
    used.