RD Instruction 1955-B

Table of Contents

Page 1

(Revision 1)

PART 1955 - PROPERTY MANAGEMENT

Subpart B - Management of Property

## [Table of Contents]{.underline}

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

1955.51 Purpose. 1

1955.52 Policy. 1

1955.53 Definitions. 2

CONACT or CONACT property. 2

Contracting Officer (CO). 2

Custodial property. 2

Farmer program loans. 2

Government. 2

Indian reservation. 2

Inventory property. 2

Loans to individuals. 2

Loans to organizations. 2A

Nonprogram (NP) property. 2A

Nonrecoverable cost. 3

Office of the General Counsel (OGC). 3

Program property. 3

Recoverable cost. 3

Servicing official. 3

Suitable property. 3

Surplus property. 3

1955.54 Redelegation of authority. 4

1955.55 Taking abandoned real or chattel property into

custody and related actions. 4

\(a\) Determination of abandonment. 4

\(b\) Taking property into Rural Development custody. 5

\(c\) Protecting custodial property. 6

\(d\) Emergency advances where liquidation is pending. 7

\(e\) Income and costs. 7

\(f\) Off-site procurements. 7

(08-20-97) PN 280

RD Instruction 1955-B

Table of Contents

Page 2

(Revision 1)

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

1955.56 Real property located in Coastal Barrier Resources

System (CBRS). 8A

\(a\) Approval official\'s scope of authority. 8A

\(b\) Administrator\'s review. 8A

\(c\) Emergency provisions. 8B

1955.57 Real property containing underground storage tanks. 8B

1955.58 - 1955.59 \[Reserved\] 10

1955.60 Inventory real property subject to redemption by the

borrower. 10

1955.61 Eviction of persons occupying inventory real property

or dispossession of persons in possession of

chattel property. 10

1955.62 Removal and disposition of nonsecurity personal

property from inventory real property. 10A

\(a\) Notification to owner or lienholder. 11

\(b\) Disposal of unclaimed personal property. 11

\(c\) Payment of costs. 12

\(d\) Removal of abandoned motor vehicles from

inventory property. 12

1955.63 Suitability determination. 12

\(a\) Determination. 12

\(b\) Grouping and subdividing farm properties larger

than family-size. 12A

\(c\) Housing property. 13

\(d\) Authority for determining suitability. 14

1955.64 Securing, maintaining, and repairing inventory

property. 14

\(a\) Basic repair policy. 14

\(b\) Authority. 15

1955.65 Management of inventory and/or custodial real property. 16

\(a\) Authority. 16

\(b\) Management methods. 16

\(c\) Obtaining services for management and/or operation

of properties. 17

\(d\) Additional management services. 18

RD Instruction 1955-B

Table of Contents

Page 3

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

1955.66 Lease of real property. 19

\(a\) Authority to approve lease of property. 19

\(b\) Selection of lessees for other than farm property. 22

\(c\) Selection of lessees for FSA property. 22

\(d\) Property securing Farmer Credit Programs loans\
located within an Indian Reservation. 22

\(e\) Lease amount. 23

\(f\) Property containing wetlands or located in a

floodplain or mudslide hazard area. 24

\(g\) Highly erodible land. 24

\(h\) Lease of FSA property with option to purchase. 24A

\(i\) Costs. 25

\(j\) Security deposit. 25

\(k\) Lease form. 26

\(l\) Lease income. 26

\(m\) Termination of lease of inventory property. 26

1955.67 Payment of liens. 27

1955.68 Payment of taxes. 27

\(a\) Suitable or program property. 28

\(b\) Surplus property. 28

\(c\) Nonprogram (NP) housing property. 28

1955.69 Insurance. 28

1955.70 Inspection of property. 28

1955.71 Vandalism or theft. 29

\(a\) Reporting. 29

\(b\) Other actions. 29

\(c\) Repair of damage due to vandalism or theft. 29

1955.72 Utilization of inventory housing by Federal Emergency

Management Agency (FEMA) or under a Memorandum of

Understanding between the Agency and the Department of Health

and Human Services (HHS) for transitional housing for

the homeless. 29

\(a\) FEMA. 29

\(b\) HHS. 29

(08-20-97) PN 280

RD Instruction 1955-B

Table of Contents

Page 4

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

1955.73 - 1955.79 \[Reserved\] 29

1955.80 Management of inventory chattel property. 30

\(a\) Care of inventory chattel property. 30

\(b\) Contracting for services. 30

\(c\) Lease of chattel property. 30

\(d\) Documenting and reporting inventory transactions. 30

1955.81 Exception authority. 31

1955.82 State supplements. 31

1955.83 - 1955.99 \[Reserved\] 31

1955.100 OMB control number. 31

## EXHIBITS TO SUBPART B

Exhibit A - Memorandum of Understanding between the Federal Emergency

Management Agency and Rural Development.

Exhibit B - Notification of Tribe of Availability of Farm Property for

Purchase.

Exhibit C - Cooperative Agreement. (Example)

Exhibit D - Fact Sheet - The Federal Interagency Task Force on Food and

Shelter for the Homeless.

## oOo 

RD Instruction 1955-B

PART 1955 - PROPERTY MANAGEMENT

Subpart B - Management of Property

§ 1955.51 [Purpose]{.underline}.

This subpart delegates authority and prescribes policies and procedures
for the Rural Housing Service (RHS) and Rural Business-Cooperative
Service (RBS) herein referred to as "Agency." This subpart does not
apply to Farm Service Agency, Farm Loan Programs, and to RHS single
family housing loans or community program loans sold without insurance
to the private sector. These community program loans will be serviced by
the private sector and future revisions to this subpart no longer apply
to such loans. This subpart does not apply to the Rural Rental Housing,
Rural Cooperative Housing, or Farm Labor Housing Program of RHS. 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.
This subpart covers: (Revised 01-09-08, PN 417.)

\(a\) Management of real property which has been taken into custody by
the respective Agency after abandonment by the borrower;

\(b\) Management of real and chattel property which is in Agency
inventory; and

\(c\) Management of real and chattel property which is security for a
guaranteed loan liquidated by an Agency (or which the Agency is in the
process of liquidating).

§ 1955.52 [Policy]{.underline}.

Inventory and custodial real property will be effectively managed to
preserve its value and protect the Government\'s financial interests.
Properties owned or controlled by the respective Agency will be
maintained so that they are not a detriment to the surrounding area and
they comply with State and local codes. Generally, RHS will continue
operation of Multi-Family Housing (MFH) projects which are acquired or
taken into custody. Servicing of repossessed or abandoned chattel
property is covered in Subpart A of Part 1962 of this chapter, and
management of inventory chattel property is covered in\
§ 1955.80 of this subpart.

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

DISTRIBUTION: WSAL Account Servicing

Property Management

## 1

## (Revision 6)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.53 [Definitions]{.underline}.

As used in this subpart, the following definitions apply:

[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 the respective
Agency.

[Contracting Officer (CO)]{.underline}. CO means a person with the
authority to enter into, administer, and/or terminate contracts and make
related determinations and findings. The term includes authorized
representatives of the CO acting within the limits of their authority as
delegated by the CO.

[Custodial property]{.underline}. Borrower-owned real property and
improvements which serve as security for an Agency loan, have been
abandoned by the borrower, and of which the respective Agency has taken
possession.

[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) loans, and Rural Housing loans for
farm service buildings (RHF).

[Government]{.underline}. The United States of America, acting through
the respective Agency, U.S. Department of Agriculture.

[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.

[Inventory property]{.underline}. Real and chattel property and related
rights to which the Government has acquired title.

[Loans to individuals]{.underline}. Farmer Program loans, as defined
above, whether to individuals or entities; Land Conservation and
Development (LCD); and Single-Family Housing (SFH), including both
Sections 502 and 504 loans.

## 2

## (Revision 6) 

RD Instruction 1955-B

§ 1955.53 (Con.)

[Loans to organizations]{.underline}. Community Facility (CF), Water and
Waste Disposal (WWD), Association Recreation, Watershed (WS), Resource
Conservation and Development (RC&D), loans to associations for
Irrigation and Drainage and other Soil and Water Conservation measures,
loans to Indian Tribes and Tribal Corporations, Shift-in-Land-Use
(Grazing Associations) Business and Industrial (B&I) to both individuals
and groups, Rural Development Loan Fund (RDLF), Intermediary Relending
Program (IRP), Nonprofit National Corporation (NNC), Economic
Opportunity Cooperative (EOC), Rural Housing Site (RHS), Rural
Cooperative Housing (RCH), and Rural Rental Housing (RRH) and Labor
Housing (LH) to both individuals and groups. The housing-type loans
identified here are referred to in this subpart collectively as MFH
loans.

[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 part
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 an older house which is excessively expensive to
heat and/or maintain for a very-low or low-income homeowner. (Revised
01-23-03, SPECIAL PN.)

## 2A

## (Revision 1) 

RD Instruction 1955-B

§ 1955.53 (Con.)

[Nonrecoverable cost.]{.underline} is a contractual or noncontractual
program loan cost expense not chargeable to a borrower, property
account, or part of the loan subsidy. (Revised 08-05-98, PN 294.)

[Office of the General Counsel (OGC)]{.underline}. The OGC, U.S.
Department of Agriculture, refers to the Regional Attorney or
Attorney-in-Charge in an OGC field office unless otherwise indicated.

[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.

[Recoverable cost]{.underline} is a contractual or noncontractual
program loan cost expense chargeable to a borrower, property account, or
part of the loan subsidy. (Revised 08-05-98, PN 294.)

[Servicing official]{.underline}. For loans to individuals as defined in
this section, the servicing official is the County Supervisor. For
insured B&I loans, the servicing official is the State Director. For
Rural Development Loan Fund and Intermediary Relending Program loans,
the servicing official is the Director, Business and Industry Division.
For Nonprofit National Corporations loans, the servicing official is
Director, Community Facility Division. For all other types of loans, the
servicing official is the District Director.

[Suitable property]{.underline}. For FSA real 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
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. 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.)

3

(Revision 6)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.54 [Redelegation of authority]{.underline}.

Authorities will be redelegated to the extent possible, consistent with
program objectives and available resources.

\(a\) 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.

\(b\) Except as provided in paragraph (a) 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.

\(c\) 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.

\(d\) 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.

§ 1955.55 [Taking abandoned real or chattel property into custody and\
related actions]{.underline}.

\(a\) [Determination of abandonment]{.underline}. (Multi-Family housing
type loans will be handled in accordance with 7 CFR part 3560, Subpart
J.) When it appears a borrower has abandoned security property, the
servicing official shall make a diligent attempt to locate the borrower
to determine what the borrower\'s intentions are concerning the
property. This includes making inquiries of neighbors, checking with the
Postal Service, utility companies, employer(s), if known, and schools,
if the borrower has children, to see if the borrower\'s whereabouts can
be determined and an address obtained. A State supplement may be issued
if necessary to further define \"abandonment\" based on State law. If
the borrower is not occupying or is not in possession of the property
but has it listed for sale with a real estate broker or has made other

## 4

## (Revision 6) 

RD Instruction 1955-B

§ 1955.55(a) (Con.)

arrangements for its care or sale, it will not be considered abandoned
so long as it is adequately secured and maintained. Except for borrowers
with Farmer Program loans, if the borrower has made no effort to sell
the property and can be located, an opportunity to voluntarily convey
the property to the Government will be offered the borrower in
accordance with § 1955.10 of Subpart A of this part. In farmer program
cases, borrowers must receive Attachments 1 and 2 of Exhibit A of
Subpart S of Part 1951 of this chapter and any appeal must be concluded
before any adverse action can be taken. The County Supervisor will send
these forms to the borrower\'s last known address as soon as it is
determined that the borrower has abandoned security property. (Revised
02-24-05, SPECIAL PN.)

\(b\) [Taking security property into Agency custody]{.underline}. When
security property is determined to be abandoned, the running record in
the borrower\'s file will be fully documented with the facts
substantiating the determination of abandonment, and the servicing
official shall proceed as follows without delay:

\(1\) For loans to individuals (except those with Farmer Program loans),
if there are no prior liens, or if a prior lienholder will not take the
measures necessary to protect the property, the County Supervisor shall
take custody of the property, and a problem case report will be prepared
recommending foreclosure in accordance with § 1955.15 of Subpart A of
this part, unless the borrower can be located and voluntary liquidation
accomplished. Farmer Program loan borrowers will be sent the forms
listed in paragraph (a) of this section and the provisions of § 1965.26
of Subpart A of Part 1965 of this chapter will be followed.

\(2\) For MFH loans, if there are no prior liens, the District Director
will immediately notify the State Director, who will request guidance
from OGC and may also request advice from the National Office. The State
Director, with the advice of OGC, will advise the borrower by writing a
letter, certified mail, return receipt requested, at the address
currently used by Finance Office, outlining proposed actions by Agency
to secure, maintain, and operate the project.

\(i\) If the unpaid loan balance plus recoverable costs do not exceed
the State Director\'s loan approval authority, the State Director will
authorize the District Director to take custody of the property, make
emergency repairs if necessary to protect the Government\'s interest,
and will advise how the property is to be managed in accordance with 7
CFR part 3560.\
(Revised 02-24-05, SPECIAL PN.)

## 5

## (Revision 1)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.55(b)(2) (Con.)

\(ii\) If the unpaid loan balance plus recoverable costs exceeds the
State Director\'s loan approval authority, the State Director will refer
the case to the National Office for advice on emergency actions to be
taken. The docket will be forwarded to the National Office with detailed
recommendations for immediate review and authorization for further
action, if requested by the MFH staff.

\(iii\) Costs incurred in connection with procurement of such things as
management services will be handled in accordance with RD Instruction
2024-A (available in any Agency office).

\(iv\) The District Director will prepare a problem case report to
initiate foreclosure in accordance with § 1955.15 of Subpart A of this
part and submit the report to the State Director along with a proposed
plan for managing the project while liquidation is pending.

\(3\) For organization loans other than MFH, if there are no prior
liens, the District Director will immediately notify the State Director
that the property has been abandoned and recommend action which should
be taken to protect the Government\'s interest. After obtaining the
advice of OGC and the appropriate staff in the National Office, the
State Director may authorize the District Director to take custody of
the property and give instructions for immediate actions to be taken as
necessary. The District Director will prepare a Report on Servicing
Action (Exhibit A of Subpart E of Part 1951 of this chapter)
recommending that foreclosure be initiated in accordance with § 1955.15
of Subpart A of this part and submit the report to the State Director,
along with a proposed plan for management and/or operation of the
project while liquidation is pending.

\(c\) [Protecting custodial property]{.underline}. The Agency official
who takes custody of abandoned property shall take the actions necessary
to secure, maintain, preserve, lease, manage, or operate the property.

\(1\) [Nonsecurity personal property on premises]{.underline}. If a
property has been abandoned by a borrower who left nonsecurity personal
property on the premises, the personal property will not be removed and
disposed of before the real property is acquired by the Government. If
the premises are in a condition which presents a fire, health or safety
hazard, but also contains items of value, only the trash and debris
presenting the hazard will be removed. The servicing official may
request advice from the State Director as necessary. The servicing
official shall check for liens on nonsecurity personal property left on
abandoned premises. If there is a known lienholder(s), the lienholder(s)
will be notified by certified mail, return receipt requested, that the
borrower has abandoned the property and that Agency has taken the real
property into custody.

## 6

## (Revision 1) 

RD Instruction 1955-B

§1955.55 (c)(l) (Con.)

Actions by Agency must not damage or jeopardize livestock, growing
crops, stored agricultural products, or any other personal property
which is not Agency security.

\(2\) [Repairs to custodial property]{.underline}. Repairs to custodial
property will be limited to those which are essential to prevent further
deterioration of the property. Expenditures in excess of an aggregate of
\$1,000 per property must have prior approval of the State Director.

\(d\) [Emergency advances where liquidation is pending]{.underline}.
Although security property may not be defined as abandoned in accordance
with paragraph (a) of this section, if the borrower is not occupying the
property and refuses or is unable to protect the security property, the
servicing official is authorized to make expenditures necessary to
protect the Government\'s interest. This would include, but is not
limited to, securing or winterizing the property or making emergency
repairs to prevent deterioration. Expenditures will be handled in
accordance with paragraph (e) of this section. Situations where this
authority may be used include, but are not limited to, where a borrower
has a sale pending or when a voluntary conveyance is in process.

\(e\) [Income and costs]{.underline}. Income received from the property
will be handled in accordance with RD Instruction 1951-B (available in
any Agency office) and applied to the borrower\'s account as an extra
payment. Expenditures will be charged to the borrower\'s account as a
recoverable cost. Costs will be paid in accordance with RD Instruction
2024-A (available in any Agency office).\
(Revised 08-13-92, SPECIAL PN.)

\(f\) [Off-site procurements]{.underline}. Circumstances may require
off-site procurement action(s) to be taken by Agency to protect
custodial, security or inventory property from damage or destruction
and/or protect the Government\'s investment in the property. Such
procurements may include, but are not limited to construction or
reconstruction of roads, sewers, drainage work or utility lines. This
type work may be accomplished either through Agency procurement or
cooperative agreement. However, if Agency is obtaining a service or
product for itself only, it must be a procurement and any such actions
will be in accordance with RD Instruction 2024-A (available in any
Agency office). Funding will come from the appropriate insurance fund.
(Added 6-12-89, SPECIAL PN)

## 7

## (Revision 2)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§1955.55 (f) (Con.)

\(1\) [Conditions for procurement]{.underline}. Such expenditures may be
made only when all of the following conditions are met:

\(i\) A determination is made that failure to procure work would likely
result in a property loss greater than the expenditure;

\(ii\) There are no other feasible means (including cooperative
agreements) to accomplish the same result; (Revised 08-13-92, SPECIAL
PN.)

\(iii\) The recovery of such advance(s) is not authorized by security
instruments in the case of security or custodial property (no such
limitation exists for inventory property);

\(iv\) Written documentation supporting subparagraphs (i), (ii) and
(iii) has been obtained from the authorized program official;

\(v\) Approval has been obtained from the appropriate Assistant
Administrator.

\(2\) [Direct procurement action]{.underline}. Where direct procurement
action is contemplated, an opinion must be obtained from the Regional
Attorney that:

\(i\) Agency has the authority to enter the off-site property to
accomplish the contemplated work, or

\(ii\) A specific legal entity has authority to grant an easement
(right-of-way) to Agency for the contemplated work and such an easement,
in a form approved by the Regional Attorney, has been obtained.

\(3\) [Cooperative agreements]{.underline}. Cooperative agreements
between Agency and other entities may be made to accomplish the
requirement where the principal purpose is to provide money, property,
services or items of value to state or local governments or other
recipients to accomplish a public purpose. Exhibit C of this subpart
(available in any Agency office) is an example of a typical cooperative
agreement. A USDA handbook providing detailed guidance for all parties
is available from the USDA - Office of Operations and Finance. Although
cooperative agreements are not a contracting action, the authority,
responsibility and administration of these agreements will be handled
consistent with contracting actions.

## 8

## (Revision 2) 

RD Instruction 1955-B

§1955.55 (f)(4) (Con.)

\(4\) [Consideration of maintenance agreements]{.underline}. Maintenance
requirements must be considered in evaluating the economic benefits of
off-site procurements. Where feasible, arrangements or agreements should
be made with state, local governments or other entities to ensure
continued maintenance by dedication or acceptance, letter agreements, or
other applicable statutes.

§1955.56 [Real property located in Coastal Barrier Resources System
(CBRS)]{.underline}.

\(a\) [Approval official\'s scope of authority]{.underline}. Any action
that is not in conflict with the limitations in paragraphs (a)(1),
(a)(2), or (a)(3) of this section shall not be undertaken until the
approval official has consulted with the appropriate Regional Director
of the U.S. Fish and Wildlife Service. The Regional Director may or may
not concur that the proposed action does or does not violate the
provisions of the Coastal Barrier Resources Act (CBRA). Pursuant to the
requirements of the CBRA. and except as specified in paragraphs (b) and
(c) of this section, no maintenance or repair action may be taken for
property located within a CBRS where:

\(1\) The action goes beyond maintenance, replacement-in-kind,
reconstruction, or repair and would result in the expansion of any
roads, structures or facilities. Water and waste disposal facilities as
well as community facilities may be improved to the extent required to
meet health and safety requirements but may not be improved or expanded
to serve additional users, patients, or residents;

\(2\) The action is inconsistent with the purposes of the CBRA; or

\(3\) The property to be repaired or maintained was initially the
subject of a financial transaction that violated the CBRA.

\(b\) [Administrator\'s review]{.underline}. Any proposed maintenance or
repair action that does not conform to the requirements of paragraph (a)
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 the Interior,
that the proposed action does not violate the provisions of the CBRA.

## 8A

(Added 6-12-89, SPECIAL PN)

RD Instruction 1955-B

§1955.56 (c)

\(c\) [Emergency provisions]{.underline}. In emergency situations to
prevent imminent loss of life, imminent substantial damage to the
inventory property or the disruption of utility service, the approval
official may take whatever minimum steps are necessary to prevent such
loss or damage without first consulting with the appropriate Regional
Director of the U.S. Fish and Wildlife Service. However, the Regional
Director must be immediately notified of any such emergency action.

§1955.57 [Real property containing underground storage
tanks]{.underline}.

Within 30 days of acquisition of real property into inventory, Agency
must report certain underground storage tanks to the State agency
identified by the Environmental Protection Agency (EPA) to receive such
reports. Notification will be accomplished by completing an appropriate
EPA or alternate State form, if approved by EPA. A State supplement will
be issued providing the appropriate forms required by EPA and
instructions on processing same.

\(a\) Underground storage tanks which meet the following criteria must
be reported:

\(1\) It is a tank, or combination of tanks (including pipes which are
connected thereto) the volume of which is ten percent or more beneath
the surface of the ground, including the volume of the underground
pipes; and

\(2\) It is not exempt from the reporting requirements as outlined in
paragraph (b) of this section; and

\(3\) The tank contains petroleum or substances defined as hazardous
under Section 101(14) of the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. 9601. The State Environmental
Coordinator should be consulted whenever there is a question regarding
the presence of a regulated substance; or

\(4\) The tank contained a regulated substance, was taken out of
operation by Agency since January 1, 1974, and remains in the ground.
Extensive research of records of inventory property sold before the
effective date of this section is not required.

## 8B

## (Added 6-12-89, SPECIAL PN) 

RD Instruction 1955-B

§ 1955.57(a) (Con.)

\(4\) The tank contained a regulated substance, was taken out of
operation by Agency since January 1, 1974, and remains in the ground.
Extensive research of records of inventory property sold before the
effective date of this section is not required.

\(b\) The following underground storage tanks are exempt from the EPA
reporting requirements:

\(1\) Farm or residential tanks of 1.100 gallons or less capacity used
for storing motor fuel for noncommercial purposes;

\(2\) Tanks used for storing heating oil for consumptive use on the
premises where stored;

\(3\) Septic tanks;

\(4\) Pipeline facilities (including gathering lines) regulated under:
(i) the Natural Gas Pipeline Safety Act of 1968; (ii) the Hazardous
Liquid Pipeline Safety Act of 1979; or (iii) for an intrastate pipeline
facility, regulated under State laws comparable to the provisions of law
referred to in (i) or (ii) above;

\(5\) Surface impoundments, pits, ponds, or lagoons;

\(6\) Storm water or wastewater collection systems;

\(7\) Flow-through process tanks;

\(8\) Liquid traps or associated gathering lines directly related to oil
or gas production and gathering operations; or

\(9\) Storage tanks situated in an underground area (such as a basement,
cellar, mineworking, drift, shaft, or tunnel) if the tank is situated
upon or above the surface of the floor.

\(c\) A copy of each report filed with the designated State agency will
be forwarded to and maintained in the State Office by program area.

\(d\) Prospective purchasers of Agency inventory property with a
reportable underground storage tank will be informed of the reporting
requirement, and provided a copy of the form filed by Agency.

\(e\) In a State which has promulgated additional underground storage
tank reporting requirements, Agency will comply with such requirements
and a State supplement will be issued to provide necessary guidance.

## 9

## (Revision 2)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.57 (Con.)

\(f\) Regardless of whether an underground storage tank must be reported
under the requirements of this section, if Agency personnel detect or
believe there has been a release of petroleum or other regulated
substance from an underground storage tank on an inventory property, the
incident will be reported to the appropriate State Agency, the State
Environmental Coordinator and appropriate program chief. These parties
will collectively inform the servicing official of the appropriate
response action.

§§ 1955.58 - 1955.59 \[Reserved\]

§ 1955.60 [Inventory real property subject to redemption by the
borrower]{.underline}.

If inventory property is subject to redemption rights, the State
Director, with prior approval of OGC, will issue a State supplement
giving guidance concerning the former borrower\'s rights, whether or not
the property may be leased or sold by the Government, payment of taxes,
maintenance, and any other items OGC deems necessary to comply with
State laws. Routine care and maintenance will be provided according to
§1955.64 of this subpart to preserve and protect the property. Repairs
are limited to those essential to prevent further deterioration of the
property or to remove a health or safety hazard to the community in
accordance with § 1955.65(a) of this subpart unless State law permits
full recovery of cost of repairs in which case usual policy on repairs
is applicable. If the former borrower with redemption rights has
possession of the property or has a right to lease proceeds, Agency will
not lease the property until the redemption period has expired unless
the State Director obtains prior authorization from OGC. Further
guidance on sale subject to redemption rights is set forth in § 1955.138
of Subpart C of this Part. (Revised 6-12-89, SPECIAL PN)

§ 1955.61 [Eviction of persons occupying inventory real property
or]{.underline}

[dispossession of persons in possession of chattel
property]{.underline}.\
(Revised 6-12-89, SPECIAL PN)

Advice and assistance will be obtained from OGC when eviction from
realty or dispossession of chattel property is necessary. Where [OGC has
given written authorization]{.underline}, eviction may be effected
through State courts rather than Federal courts when the former borrower
is involved or through local courts instead of Federal/State courts when
the party occupying/possessing the Agency property is not the former
borrower. In those cases, a State supplement will be issued to provide
explicit instructions. For MFH, eviction of tenants will be handled in
accordance with 7 CFR part 3560, Subpart D and with the terms of the
tenant\'s lease. If no written lease exists, the State Director will
obtain advice from OGC. (Revised 02-24-05, SPECIAL PN.)

## 10

## (Revision 2) 

RD Instruction 1955-B

§1955.62

§1955.62 [Removal and disposition of nonsecurity personal property from
inventory real property]{.underline}.

If the former borrower has vacated the inventory property but left items
of value which do not customarily pass with title to the real estate,
such as furniture, personal effects, and chattels not covered by an
Agency lien, the personal property will be handled as outlined below
unless otherwise directed by a State supplement approved by OGC which is
necessary to comply with State law. For MFH, the removal and disposition
of nonsecurity personal property will be handled in accordance with the
tenant\'s lease or advice from OGC. When property is deemed to have no
value, it is recommended that it be photographed for documentation
before it is disposed of. The Agency official having custody of the
property may request advice from the State Office staff as necessary.
Actions to effect removal of items of value from inventory property
shall be as follows:

## 10A

## (Added 6-12-89, SPECIAL PN) 

RD Instruction 1955-B

§ 1955.62 (Con.)

\(a\) [Notification to owner or lienholder]{.underline}. The servicing
official will check the public records to see if there is a lien on any
of the personal property.

\(1\) If there is a lien(s) of record, the servicing official will
notify the lienholder(s) by certified mail, return receipt requested,
that the personal property will be disposed of by the Agency unless it
is removed from the premises within 7 days from the date of the letter.

\(2\) If there are no liens of record, or if a lienholder notified in
accordance with paragraph (a)(1) of this section fails to remove the
property within the time specified, the servicing official will notify
the former borrower at the last known address by certified mail, return
receipt requested, that the personal property remaining on the premises
will be disposed of by the Agency unless it is removed within 7 days
from the date of the letter. If no address can be determined, a copy of
the letter should be posted on the front door of the property and
documentation entered in the running record of the Agency file.

\(b\) [Disposal of unclaimed personal property]{.underline}. If the
property is not removed by the former borrower or a lienholder after
notification as outlined in paragraphs (a)(1) and (a)(2) of this
section, the servicing official shall list the items with clear
description, estimated value, and indication of which are covered by a
lien, if any, and submit the list to the State Director with a request
for authorization to have the items removed and disposed of. Based on
advice from OGC, the State Director will give authorization and provide
instructions for removal and disposal of the personal property. If
approved by OGC, the property may be disposed of as follows:

\(1\) If a reasonable amount can likely be realized by the Agency from
sale of the personal property, it may be sold at public sale. Items
under lien will be sold first and the proceeds up to the amount of the
lien paid to the lienholder(s) less a pro rata share of the sale
expenses. Proceeds from sale of items not under lien and proceeds in
excess of the amount due a lienholder will be remitted according to RD
Instruction 1951-B and applied in the following order:

\(i\) To the inventory account up to the amount of expenses incurred by
the Government in connection with sale of the personal property (such as
advertising and auctioneer, if used).

## 11

## (Revision 5)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.62(b)(1) (Con.)

\(ii\) To an unsatisfied balance on the Agency loan account, if any.

\(iii\) To the borrower, if whereabouts are known.

\(2\) If personal property is not sold, a mover or hauler may\
be authorized to take the items for moving costs. Refer to\
RD Instruction 2024-A for guidance.

\(c\) [Payment of costs]{.underline}. Upon payment of all expenses
incurred by the Government in connection with the personal property,
Rural Development will allow the former borrower or a lienholder access
to the property to reclaim the personal property at any time prior to
its disposal.

\(d\) [Removal of abandoned motor vehicles from inventory
property]{.underline}. Since State laws vary concerning disposal of
abandoned motor vehicles, the State Director shall, with the advice of
OGC, issue a State Supplement outlining the method to be followed which
will comply with applicable State laws.

§ 1955.63 [Suitability determination]{.underline}.

As soon as real property is acquired, a determination must be made as to
whether or not the property can be used for program purposes. The
suitability determination will be recorded in the running record of the
case file. (Revised 08-20-97, PN 280.)

\(a\) [Determination]{.underline}. The Agency will classify property
that secured loans or was acquired under the CONACT as "suitable
property" or "surplus property" in accordance with the definitions found
in\
§ 1955.53. For other Agencies, this determination will be made by the
State Director, or designee. A 5L ADPS "Acquired Property Maintenance,"
transaction must be entered into the Agency field office terminal to
update the change in the property's classification. (Revised 09-10-03,
PN 363.)

## 12

## (Revision 5) 

RD Instruction 1955-B

§ 1955.63 (Con.)

\(b\) [Grouping and subdividing farm properties]{.underline}. To the
maximum extent practicable, the Agency will maximize the opportunity for
beginning farmers and ranchers to purchase inventory properties. Farm
properties may be subdivided or grouped according to § 1955.140, as
feasible, to carry out the objectives of the applicable loan program.
Properties may also be subdivided to facilitate the granting or selling
of a conservation easement or the fee title transfer of portions of a
property for conservation purposes. The environmental effects of such
actions will be considered pursuant to subpart G of part 1940 of this
chapter. The State Executive Director, with prior approval of OGC, may
issue a State supplement addressing any applicable State laws. Surveys
required to divide tracts will be obtained by contract in accordance
with FAR and charged as a non-recoverable cost. Subdivision of acquired
property will be input into the Automated Discrepancy Processing System
(ADPS) as an 8P, Acquired Property -- Subdivision Transaction. (Revised
09-10-03,PN 363.)

## 12A

## (Revision 4)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.63(b) (Con.)

property will be reported on Form RD 1955-3C, \"Acquired Property -
Subdivision,\" in accordance with the Forms Manual Insert (FMI).
(Revised 06-28-95, PN 247.)

\(c\) [Housing property]{.underline}. Property which secured housing
loans will be classified as \"program\" or \"nonprogram (NP).\" After
determination of whether the property is suited for retention in the
respective program, the repair policy outlined in § 1955.64(a) of this
subpart will be followed. In determining whether a property is suited
for retention in the program, items such as size, design, possible
health and/or safety hazards and obsolescence due to functional,
economic, or locational conditions must carefully be considered.
Generally, program property will meet, or can be realistically repaired
to meet, the standards for existing housing outlined in 7 CFR 3550,
provided the property is typical of modest homes in the area. The cost
of repairs will generally not be considered in determining suitability.
Since houses, sites and locations vary widely throughout the country,
discretion and sound judgment must be used in determining suitability.
The majority of houses the RHS acquires will be suited for retention and
classified as \"program\" property. In some instances, property will not
be suited for retention in the program and will be classified as
\"nonprogram (NP)\" property. Situations of this type include, but are
not limited to: (Revised 10-27-95, SPECIAL PN.)

\(1\) A dwelling which has been enlarged or improved to the point where
it is clearly above-modest. (Revised 10-27-95, SPECIAL PN.)

\(2\) When a determination is made that the property should not have
been financed originally.

\(3\) A dwelling brought into the program as an existing dwelling which
met program standards at the time it was originally financed by RHS but
which does not conform to current policies. This includes older and/or
larger homes of a type which have proven to create excessive energy
and/or maintenance costs to very-low and low-income borrowers.

\(4\) A dwelling which is obsolete due to location, design, construction
or age.

\(5\) A dwelling which requires major redesign/renovation to be brought
to program standards.

13

(Revision 4)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.63 (Con.)

\(d\) [Authority for determining suitability]{.underline}. (Revised
06-28-95,\
PN 247.)

\(1\) [County Supervisor]{.underline}. The County Supervisor will
determine suitability of farm and SFH property with the advice of the
District Director if the County Supervisor is uncertain of the proper
classification for the property.

\(2\) [District Director]{.underline}. The District Director will assist
the County Supervisor in determining suitability of farm and SFH
property as provided in this section.

\(3\) [State Director]{.underline}. The State Director will determine
suitability of all types of property other than farm property. With the
recommendations of the District Director, the State Director will make
determinations on MFH property.

§ 1955.64 [Securing, maintaining, and repairing inventory
property]{.underline}.

When property is acquired, the servicing official shall inspect the
property and take the necessary steps to see that it is secured and
maintained. \"NO TRESPASSING,\" \"FOR SALE,\" (with Equal Housing
Opportunity logo and telephone number of the appropriate contact person)
or other appropriate signs may be posted on the property at the
discretion of the responsible official. The servicing official is
responsible for initiating actions to assure that the value of the
inventory property is preserved. If real property (exclusive of
improvements) is unsafe, refer to § 1955.137(f) of Subpart C of this
part for further guidance. Substantial improvement or repair of property
located in a floodplain or mudslide hazard area is subject to the
limitation outlined in exhibit C, paragraph 3b(1) and (2) of Subpart G
of Part 1940 of this chapter, and § 1955.56 of this Subpart.\
(Revised 08-20-97, PN 280.)

\(a\) [Basic repair policy]{.underline}. After a determination of
suitability is made, repairs will be accomplished in accordance with the
following provisions. Properties that are listed or eligible for listing
on the National Register of Historic Places, in whole or in part (see\
§ 1955.137(c) of Subpart C of this part), will be repaired as necessary
to protect their historic integrity after consultation with the State
Historic Preservation Officer and the Advisory Council on Historic
Preservation regarding any repairs. Also, if any property presents a
health or safety hazard, except for SFH and MFH properties to be sold
with \"Decent, Safe and Sanitary\" (DSS) clauses, necessary steps will
be taken to remove the hazard, and if necessary, after seeking advice
from appropriate agencies having related expertise or jurisdiction.\
(Revised 08-20-97, PN 280.)

14

(Revision 4)

RD Instruction 1955-B

§1955.64 (a) (1)

\(1\) [SFH]{.underline}. (Revised 6-12-89, SPECIAL PN)

\(i\) Program property. Program property will be repaired, renovated,
and/or improved as necessary to meet program standards for existing
housing, to enhance buyer appeal, and make the maximum recovery on the
Government\'s investment, with the objective being to sell the property
at the earliest time possible. Attention should be given to the interior
and exterior of the structure(s), landscaping, driveways, walks, and
other site improvements which will enhance marketability. Exceptions to
this policy are authorized only when a prospective program applicant has
indicated a willingness to buy a specific property \"as-is\" and make
needed repairs with his/her own resources or with subsequent loan made
simultaneously with the credit sale. In areas where severe vandalism is
prevalent, the State Director is authorized to waive the repair policy
in specific locations when the County Supervisor requests the waiver
based upon documentation to support the request. In these cases a
subsequent loan for the cost of repairs may be made in conjunction with
the credit sale. A \"Neighborhood Watch\" program or similar effort
should be considered to reduce vandalism. (Added 6-12-89, SPECIAL PN)

\(ii\) [Nonprogram (NP) property]{.underline}. NP property should be
cleaned, free of trash (dwelling and lot), and made presentable to
enhance marketability. Repairs will generally not be made unless they
increase the \"as-is\" market value by at least the cost of repairs. NP
property which does not meet the \"Decent, Safe and Sanitary\" (DSS)
standards outlined in §1955.103 of Subpart C of Part 1955 of this
chapter will be repaired to meet these standards only when the cost of
the repairs will increase the \"as-is\" market value by at least the
cost of repairs. However, any NP property which is listed or is eligible
for listing on the National Register of Historic Places will be repaired
to the extent necessary to protect and prevent deterioration of its
historic integrity after consultation with the State Historic
Preservation Officer and the Advisory Council on Historic Preservation.
(Added 6-12-89, SPECIAL PN)

## 14A

## (Added 6-12-89, SPECIAL PN)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.64(a) (Con.)

\(2\) [MFH]{.underline}. MFH property should be evaluated to determine
if repairs are necessary or if a prospective buyer may wish to
rehabilitate the property after purchasing it in an \"as is\" condition.
Property which does not meet the DSS standards outlined in § 1955.103(f)
of Subpart C of this part is subject to the occupancy restrictions set
forth in § 1955.116 of Subpart C of this part.

\(3\) [Farm property]{.underline}. Except as provided in paragraph (a)
of this section, only the farm service buildings and facilities
typically essential for the type of farming in the area will be
repaired, renovated, and/or improved as necessary to place the farm in
marketable condition. Conservation of soil, water and forest resources
will be considered and actions will be taken to correct severe problems
upon advice of the Natural Resources Conservation Service (NRCS),
through the development of conservation practices for the farm property.
The county office will request that the SCS identify the location of any
highly erodible land and recommend specific conservation practices to
control erosion. The County Supervisor will carry out those conservation
practices that are essential to preserve and protect the property and to
place it in marketable condition. Any differences between FSA and NRCS
regarding the need for a certain practice will be resolved in the manner
indicated in § 1955.137(d)(2) of Subpart C of this Part. Recommendations
will also be requested from the U.S. Fish and Wildlife Service regarding
fish and wildlife conservation measures. See Exhibit A of RD Instruction
2000-LL for further information. (Revised 08-20-97, PN 280.)

\(4\) [Property other than housing and farms]{.underline}. Each property
will be evaluated individually to determine whether repairs should be
made or the property offered for sale \"as-is.\" The State Director will
obtain advice from the appropriate division in the National Office as
necessary in making these determinations.

\(b\) [Authority]{.underline}. Program and contracting authority is
contained in RD Instruction 2024-A.

## 15

## (Revision 3)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.65 [Management of inventory and/or custodial real
property]{.underline}.

\(a\) [Authority]{.underline}.

\(1\) [County Supervisor]{.underline}. The County Supervisor, with the
assistance of the District Director and State Office program staff as
necessary, will select the management method(s) used for property which
secures (or secured) loans to individuals as defined in this subpart.

\(2\) [State Director]{.underline}. The State Director will select the
management method to be used for property which secures (or secured)
loans to organizations as defined in this subpart. The State Director
shall also provide guidance and assistance to County Supervisors and
District Directors as necessary to insure that property under their
jurisdiction is effectively managed.

\(b\) [Management methods]{.underline}. Management methods and
requirements will vary depending on such things as the number of
properties involved, their density of location, and market conditions.
Management tools which may be used effectively range from contracts to
secure individual property, have the grass cut, or winterize a dwelling;
a simple management contract to provide maintenance and other services
on a group of properties (including but not limited to specification
writing, inspection of repairs, and yard and directional signs and their
installation), or manage an MFH project; blanket-purchase arrangement
contracts to obtain services for more than one property; to a
broad-scope management contract with a real estate broker or management
agent which may include inspection and specification-writing services,
making simple repairs, obtaining lessees, collecting rents, coordination
with listing brokers in marketing the properties and effecting eviction
of tenants when necessary. A contractor may handle evictions only where
State laws permit the contractor to do so in his/her own name; a
contractor may not pursue eviction in the name of the Government.
Custodial property may be managed in the same manner as inventory
property except that it may be leased only if it is habitable without
repairs in excess of those authorized in § 1955.55(c) of this Subpart.
Farm or organization property, such as rental housing and community
facilities, may be operated under a management contract if the State
Director has determined it is appropriate to have the property in
operation. In any case, the primary consideration in selecting the
method of management to be used is to protect the Government\'s
interest. If property to be operated or leased under a management
contract is located in an area identified by the Federal Insurance
Administration as a special flood or mudslide hazard area, lessees or
tenants must be notified to that effect in accordance with § 1955.66(e)
of this Subpart. A management contract which covers property in such a
hazard area may provide for the contractor to issue the required
notices.

## 16

## (Revision 3) 

RD Instruction 1955-B

§ 1955.65 (Con.)

\(c\) [Obtaining services for management and/or operation of
properties]{.underline}. Services for management, repair, and/or
operation of properties will be obtained by contract in accordance with
RD Instruction 2024-A (available in any Agency office).

\(1\) [Management contracts]{.underline}. Management contracts are
flexible instruments which may be tailored to meet the specific needs of
almost any situation involving custodial or inventory property. This
type of contract may be used to manage and maintain SFH properties,
farms, and any other type of facility for which Agency is responsible.
Organization-type properties will be secured, maintained, repaired, and
operated if authorized, in accordance with a management plan prepared by
the District Director and approved by the State Director if the amount
of total debt does not exceed the State Director\'s loan approval
authority, or by the Administrator. An audit of the borrower\'s records
may be required if recent financial information is not available. For
MFH projects, tenant occupancy and selection will be in accordance with
the occupancy standards set forth in 7 CFR part 3560. subpart D. Tenants
will be required to sign a written lease if one does not exist when the
property is acquired or taken into custody. If a contract involves
management of an MFH project with 5 or more units, or 5 or more
single-family dwellings located in the same subdivision, the contractor
must furnish Form HUD 935.2, \"Affirmative Fair Housing Marketing
Plan,\" subject to Agency\'s approval. Contracts for management of farm
inventory property will be offered on a competitive bid basis, giving
preference to persons who live in, and own and operate qualified small
businesses in the area where the property is located in accordance with
the provisions in RD Instruction 2024-Q (available in any Agency
office). (Revised\
02-24-05, SPECIAL PN.)

\(2\) [Authority to enter into management contracts]{.underline}.

\(i\) The County Supervisor may enter into a management contract for
basic services involving farms or not more than 25 single-family
dwellings; however, the aggregate amount paid under a contract may not
exceed the contracting authority limitation for County Supervisors
outlined in RD Instruction 2024-A (available in any Agency office).

\(ii\) A District Director may enter into a management contract for
basic maintenance and management services for an MFH project within the
contracting authority outlined in\
RD Instruction 2024-A (available in any Agency office). The aggregate
amount of any contract may not exceed that contracting authority

## 17

## (Revision 3)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.65(c)(2) (Con.)

\(iii\) A CO in the State Office may enter into a management contract
for basic services involving more than 25 single-family dwellings, a
more complex management contract for SFH property, or an appropriate
contract for management or operation of farm or organization-type
property. The aggregate amount paid under a contract may not exceed the
contracting authority limitation for State Office staff outlined in RD
Instruction 2024-A (available in any Agency office).

\(iv\) If a proposed management contract will exceed the contracting
authority for State Office staff within a short time, a request for
contract action will be forwarded to the Administrator, to the attention
of the appropriate program division.

\(3\) [Specification of services]{.underline}. All management contracts
will provide for termination by either the contractor or the Government
upon 30 days written notice. Contracts providing for management of
multiple properties will also provide for properties to be added or
removed from the contractor\'s assignment whenever necessary, such as
when a property is acquired or taken into custody during the period of a
contract or when a property is sold from inventory. If a contractor
prepares repair specifications, that contractor will be excluded from
the solicitation for making the repairs to avoid a conflict of interest.
If a management contract calls for specification writing services, a
clause must be inserted in the contract prohibiting the preparer or
his/her associates from doing the repair work. (Revised 04-20-05, PN
385.)

\(4\) [Costs]{.underline}. Costs incurred with the management of
property will be paid according to RD Instruction 2024-A (available in
any Agency Office). For management of custodial property, costs will be
charged to the borrower\'s account as recoverable; and for management of
inventory property as nonrecoverable. Except for management fees, costs
of managing MFH inventory property when tenants are still in residence
will be paid to the extent possible with rental income. Management fees
will be paid to the manager in accordance with RD Instruction 2024-A
(available in any Agency Office). (Revised 08-13-92, SPECIAL PN.)

\(d\) [Additional management services]{.underline}. Additional types of
management services and supplies for which the State Director may
authorize acquisition include: appraisal services (except for MFH),
security services, newspaper copy preparation services, market data and
comparable list acquisition, and tax data acquisition. If the State
Director believes there is a need to acquire other services not in this

## 18

## (Revision 3) 

RD Instruction 1955-B

§ 1955.65(d) (Con.)

paragraph or authorized elsewhere in this subpart, the State Director
should make a written request to the Assistant Administrator
(appropriate program) for consideration and/or authorization.

§ 1955.66 [Lease of real property]{.underline}.

When inventory real property, except for FSA and MFH properties, cannot
be sold promptly, or when custodial property is subject to lengthy
liquidation proceedings, leasing may be used as a management tool when
it is clearly in the best interest of the Government. Leasing will not
be used as a means of deferring other actions which should be taken,
such as liquidation of loans in abandonment cases or repair and sale of
inventory property. Leases will provide for cancellation by the lessee
or the Agency on 30-day written notice unless Special Stipulations in an
individual lease for good reason provide otherwise. If extensive repairs
are needed to render a custodial property suitable for occupancy, this
will preclude its being leased since repairs must be limited to those
essential to prevent further deterioration of the security in accordance
with § 1955.55(c). The requirements of Subpart G of Part 1940 will also
be met for all leases. (Revised 08-20-97, PN 280.)

\(a\) [Authority to approve lease of property]{.underline}.

\(1\) [Custodial property]{.underline}. Custodial property may be leased
pending foreclosure with the servicing official approving the lease on
behalf of the Agency. (Revised 06-21-96, SPECIAL PN.)

\(2\) [Inventory property]{.underline}. Inventory property may be leased
under the following conditions. Except for farm property proposed for
lease under the Homestead Protection Program, any property that is
listed or eligible for listing on the National Register of Historic
Places may be leased only after the servicing official and the State
Historic Preservation Officer determine that the lease will adequately
ensure the property\'s condition and historic character. (Revised
08-20-97, PN 280.)

\(i\) [SFH]{.underline}. SFH inventory will generally not be leased;
however, if unusual circumstances indicate leasing may be prudent, the
County Supervisor is authorized to approve the lease.

(Revised 06-12-89, SPECIAL PN.)

\(ii\) [MFH]{.underline}. MFH projects will generally not be leased,
although individual living units may be leased under a management
agreement. After the property is placed under a management

## 19

## (Revision 5)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.66(a)(2)(ii) (Con.)

contract, the contractor will be responsible for leasing the individual
units in accordance with 7 CFR part 3560. In cases where an acceptable
management contract cannot be obtained, the District Director may
execute individual leases.\
(Revised 02-24-05, SPECIAL PN.)

\(iii\) [Farm property]{.underline}.

\(A\) Any property which secures an insured loan made under the CONACT
and which contains a dwelling (whether located on or off the farm) that
is possessed and occupied as a principal residence by a prior owner who
was personally liable for a Farm Credit Programs loan must first be
considered for Homestead Protection in accordance with Subpart S of Part
1951 of this chapter. (Revised 08-20-97, PN 280.)

\(B\) Other than for Homestead Protection and except as provided in
paragraph (c), the county official may only approve the lease of farm
property to a beginning farmer or rancher who was selected through the
random selection process to purchase the property but is not able to
complete the purchase due to the lack of Agency funding. (Revised
08-20-97, PN 280.)

\(C\) When the servicing official determines it is impossible to sell
farm property after advertising the property for sale and negotiating
with interested parties in accordance with § 1955.107 of Subpart C of
this Part, farm property may be leased, upon the approval of the
Administrator, on a case-by-case basis. This authority cannot be
delegated. Any lease under this paragraph shall be for one year only,
and not subject to renewal or extension. If the servicing official
determines that the prospective lessee may be interested in purchasing
the property, the lease may contain an option to purchase. (Revised
08-20-97, PN 280.)

\(D\) When a lease with an option to purchase is signed, the lessee
should be advised that FSA cannot make a commitment to finance the
purchase of the property. (Revised 08-20-97, PN 280.)

\(E\) Chattel property will not normally be leased unless it is attached
to the real estate as a fixture or would normally pass with the land.

## 20

## (Revision 5) 

RD Instruction 1955-B

§ 1955.66(a)(2)(iii) (Con.)

\(F\) The property may not be used for any purpose that will contribute
to excessive erosion of highly erodible land or to 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
lessees of inventory property will be notified in writing of the
presence of highly erodible land, converted wetlands and wetland and
other important resources such as threatened or endangered species. This
notification will include a copy of the completed and signed Form
SCS-CPA-26, \"Highly Erodible Land and Wetland Conservation
Determination,\" which identifies whether the property contains wetland
or converted wetlands or highly erodible land. The notification will
also state that the lease will contain a restriction on the use of such
property and that FSA's compliance requirements for wetlands, converted
wetlands, and highly erodible land are contained in Exhibit M of Subpart
G of Part 1940 of this chapter. If converted wetlands are present, the
notification will also state that FSA will not lease converted wetlands
for the purpose of producing an agricultural commodity, except as
provided in § 1955.137 of Subpart C of this Part concerning prior
converted cropland or frequently cropped wetland. Additionally, a copy
of the completed and signed Form SCS-CPA-26 will be attached to the
lease and the lease will contain a special stipulation as provided on
the FMI to Form\
RD 1955-20, \"Lease of Real Property,\" prohibiting the use of the
property as specified above. (Revised 08-20-97, PN 280.)

\(iv\) [Organization property other than MFH]{.underline}. Only the
State Director, with the advice of appropriate National Office staff,
may approve the lease of organization property other than MFH, such as
community facilities, recreation projects, and businesses. Lease of
utilities may require approval by State regulatory agencies. OGC
assistance will be requested in preparation of the lease for property in
this category.

## 21

## (Revision 4)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.66 (Con.)

\(b\) [Selection of lessees for other than farm property]{.underline}.
When the property to be leased is residential, a special effort will be
made to reach prospective lessees who might not otherwise apply because
of existing community patterns. A lessee will be selected considering
the potential as a program applicant for purchase of the property (if
property is suited for program purposes) and ability to preserve the
property. The leasing official may require verification of income or a
credit report (to be paid for by the prospective lessee) as he or she
deems necessary to assure payment ability and creditworthiness of the
prospective lessee.

\(c\) [Selection of lessees for FSA property]{.underline}. FSA inventory
property may only be leased to an eligible beginning farmer or rancher
applicant who was selected to purchase the property through the random
selection process in accordance with § 1955.107(a)(2)(ii) of Subpart C
of this part. The applicant must have been able to demonstrate a
feasible farm plan and Agency funds must have been unavailable at the
time of the sale. Any applicant determined not to be a beginning farmer
or rancher may request that the State Executive Director conduct an
expedited review in accordance with § 1955.107(a)(2)(ii) of this
Subpart. (Revised 08-20-97, PN 280.)

\(d\) [Property securing Farm Credit Programs loans located within an
Indian Reservation]{.underline}. (Revised 08-20-97, PN 280.)

\(1\) State Executive Directors will contact the Bureau of Indian
Affairs Agency supervisor to determine the boundaries of Indian
Reservations and Indian allotments. A State supplement will be issued to
identify the boundaries of such Indian Reservations and Indian allotment
lands.

\(2\) Not later than 90 days after acquiring a property, FSA shall
afford the Indian tribe having jurisdiction over the Indian reservation
within which the inventory property is located an opportunity to
purchase the property. The purchase shall be in accordance with the
priority rights as follows:

> \(i\) To an Native American member of the Indian tribe that has
> jurisdiction over the reservation within which the real property is
> located;
>
> \(ii\) To an Indian corporate entity;
>
> \(iii\) To the Indian tribe.

## 22

## (Revision 4) 

RD Instruction 1955-B

§ 1955.66(d) (Con.)

\(3\) The Indian tribe having jurisdiction over the Indian reservation
may revise the order of priority and may restrict the eligibility for
purchase to:

> \(i\) Persons who are members of such Indian tribe;
>
> \(ii\) Indian corporate entities that are authorized by such Indian
> tribe to purchase lands within the boundaries of the reservation; or
>
> \(iii\) The Indian tribe itself.

\(4\) If any individual, Indian corporate entity or Indian tribe covered
in paragraphs (d)(1) and (d)(2) of this section wishes to purchase the
property, the County official must determine the prospective purchaser
has the financial resources and management skills and experience that is
sufficient to assure a reasonable prospect that the terms of the
purchase agreement can be fulfilled. Adverse decisions will be
appealable.

\(5\) If the real property is not purchased by any individual, Indian
corporate entity or Indian tribe pursuant to paragraphs (d)(1)\
and (d)(2) of this section and all appeals have concluded, the State
Executive Director shall transfer the property to the Secretary of the
Interior. If present on the property being transferred, important
resources will be protected as outlined in §§ 1955.137\
and 1955.139 of Subpart C of this Part.

\(6\) Properties within a reservation formerly owned by entities and
non-tribal members will be treated as regular inventory that is not
located on an Indian Reservation and disposed of pursuant to this
Subpart and Subpart C of this Part

\(e\) [Lease amount]{.underline}. Inventory property will be leased for
an amount equal to that for which similar properties in the area are
being leased or rented (market rent). In no case will inventory property
be leased for a token amount.

\(1\) [Farm property]{.underline}. To arrive at a market rent amount,
the county official will make a survey of lease amounts of farms in the
immediate area with similar soils, capabilities, and income potential.
The income-producing capability of the property during the term of the
lease must also be considered. This rental data will be maintained in an
operational file as well as in the running records of case files for
leased inventory properties. While cash rent is preferred, lease of a
farm on a crop-share basis may be

## 

## 

## 23

## (Revision 6)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.66(e)(1) (Con.)

approved if this is the customary method in the area. For crop-share
leases, the lease amount and terms must be outlined in detail in the
\"Special Stipulations\" section of the lease in accordance with the FMI
for Form RD 1955-20. The lessee will in these cases market the crops,
provide FSA with documented evidence of crop income, and pay the pro
rata share of the income to FSA. The leasing official is responsible for
seeing that crops are properly accounted for and for collecting the
lease money.\
(Revised 08-20-97, PN 280.)

\(2\) [SFH property]{.underline}. The lease amount will be the market
rent unless the lessee is a potential program applicant, in which case
the lease amount may be set at an amount approximating the monthly
payment if a loan were made (reflecting payment assistance, if any)
calculated on the basis of the price of the house and income of the
lessee, plus 1/12 of the estimated real estate taxes, property
insurance, and maintenance which would be payable by a homeowner.\
(Revised 10-27-95, SPECIAL PN.)

\(3\) [Property other than farm or SFH]{.underline}. Any inventory
property other than a farm or single-family dwelling will generally be
leased for market rent for that type property in the area. However, such
property may be leased for less than market rent with prior approval of
the Administrator.

\(f\) [Property containing wetlands or located in a floodplain or
mudslide hazard area]{.underline}. Inventory property located in areas
identified by the Federal Insurance Administration as special flood or
mudslide hazard areas will not be leased or operated under a management
contract\
without prior written notice of the hazard to the prospective lessee or
tenant. If property is leased by FSA, the servicing official will
provide the notice, and if property is leased under a management
contract, the contractor must provide the notice in compliance with a
provision to that effect included in the contract. The notice must be in
writing, signed by the servicing official or the contractor, and
delivered to the prospective lessee or tenant at least one day before
the lease is signed. A copy of the notice will be attached to the
original and each copy of the lease. Property containing floodplains and
wetlands will be leased subject to the same use restrictions as
contained in § 1955.137(a)(1) of Subpart C of this Part.\
(Revised 6-12-89, SPECIAL PN.)

\(g\) [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. (Revised 11-03-93, SPECIAL PN.)

## 24

## (Revision 6) 

RD Instruction 1955-B

§ 1955.66 (Con.)

\(h\) [Lease of FSA property with option to purchase]{.underline}.

A beginning farmer or rancher lessee will be given an option to purchase
farm property. Terms of the option will be set forth as part of the
lease as a special stipulation in accordance with the FMI for Form RD
1955-20. (Revised 08-20-97, PN 280.)

\(1\) The lease payments will not be applied toward the purchase price.

\(2\) The purchase price (option price) will be the advertised sales
price as determined by an appraisal prepared in accordance with FSA
Handbook 1-FLP. (Revised 04-19-00, PN 319.)

\(3\) For inventory properties leased to a beginning farmer or rancher
applicant, the term of the lease shall be:

\(i\) A period not to exceed 18 months from the date that the applicant
was selected to purchase the inventory farm, or

\(ii\) the date that direct, guaranteed, credit sale or other Agency
funds become available for the beginning farmer or rancher to close the
sale.

\(4\) Indian tribes or tribal corporations which utilize the Indian Land
Acquisition program will be allowed to purchase the property for its
market value less the contributory value of the buildings, in accordance
with Subpart N of Part 1823 (RD Instruction 442.11).

## 24A

## (Revision 3)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.66 (Con.)

\(i\) [Costs]{.underline}. The costs of repairs to leased property will
be paid by the Government. However, the Government will not pay costs of
utilities or any other costs of operation of the property by the lessee.
Repairs will be obtained pursuant to Subpart B of Part 1924 of this
chapter. Expenditures on custodial property as limited in §
1955.55(c)(2) of this Subpart will be charged to the borrower\'s account
as recoverable costs; and on inventory property, they will be charged to
the inventory account as nonrecoverable costs. (Renumbered 08-20-97, PN
280.)

\(j\) [Security deposit]{.underline}. A security deposit in at least the
amount of one month\'s rent will be required from all lessees of SFH
properties. The security deposit for farm property should be determined
by considering only the improvements or facilities which might be
subject to misuse or abuse during the term of the lease. For all other
types of property, the leasing official may determine whether or not a
security deposit will be required and the amount of the deposit with
advice from the State Office staff if requested. Security deposits will
be remitted according to RD Instruction 1951-B and held by the Finance
Office until the leasing official determines to return or otherwise to
dispose of the security deposit. The Finance Office Property Accounting
Unit will be requested by memorandum to return the deposit to the
servicing office for delivery to the lessee; or, if the deposit is to be
retained by the Agency, to apply it to the borrower\'s account (for
custodial property) or to the inventory account, as appropriate.
(Renumbered 08-20-97,\
PN 280.)

For MFH projects, either the security deposit policy may be suspended or
the deposits will be handled as follows:

\(1\) Form RD 1944-9, \"Multiple Housing Certification and Payment
Transmittal,\" prepared according to the FMI must be forwarded to the
Finance Office for every tenant from whom a deposit is required. A
notation will be entered under the tenant\'s name that it is a security
deposit for inventory property, Advice No.\_\_\_\_\_\_\_, formerly owned
by\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

\(2\) If security deposits are no longer to be required and there are
outstanding deposits which should be refunded, requests will be handled
as they would have been prior to acquisition of the property.

## 

## 

## 

## 

## 

## 

## 

## 25

## (Revision 2)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.66 (Con.)

\(k\) [Lease form]{.underline}. Form RD 1955-20, prepared according to
the FMI, or other form approved by OGC, will be used by the Agency to
lease property. The lease will be prepared, executed, and distributed
according to the FMI depending on whether it is custodial or inventory
property. On receipt of a lease of inventory property, the Finance
Office will establish a lease account in the lessee\'s name. In
servicing the lease account, a suspend code may be established or
removed from a lease record by completion of Form RD 1955-3D, \"Acquired
property - Suspend Code,\" in accordance with the FMI.\
(Renumbered 08-20-97, PN 280.)

\(l\) [Lease income]{.underline}. Lease proceeds will be remitted
according to\
RD Instruction 1951-B. (Renumbered 08-20-97, PN 280.)

\(1\) [Custodial property]{.underline}. The proceeds from lease of
custodial property will be applied to the borrower\'s account as an
extra payment unless foreclosure proceedings require that such payments
be held in suspense. OGC will be consulted as to the procedure to be
followed in each State and instructions will be given in a State
supplement.

\(2\) [Inventory property]{.underline}. The proceeds from lease of
inventory property will be applied to the lease account.

\(m\) [Termination of lease of inventory property]{.underline}. When a
lease is terminated, or when the property is sold before expiration of
the term shown of the lease submitted to the Finance Office, the
servicing official will notify the Finance Office of the termination and
the effective date of termination according to the FMI for

Form RD 1955-20. (Renumbered 08-20-97, PN 280.)

## 26

## (Revision 2) 

RD Instruction 1955-B

§ 1955.67 [Payment of liens]{.underline}.

\(a\) If real estate was acquired subject to a lien, the servicing
official may authorize payment of installments that may include escrow
payments to the prior lienholder for taxes, if the property is taxable.
Payment will be made according to RD Instruction 2024-A (available in
any Agency Office). The payment will be charged to the inventory account
as a recoverable cost. If it is later determined that continuing to make
payments on prior liens is no longer in the best interest of the
Government for reasons such as, but not limited to, declining property
values or uninsured property losses, the State Director may: (Revised
08-05-98, PN 294.)

\(1\) Convey the property to the prior lienholder if the lienholder will
agree to accept the conveyance in full satisfaction of the prior lien;
or

\(2\) Discontinue payments to the lienholder, and allow the lien to be
foreclosed.

\(b\) If the State Director determines that paying a lien in full would
be in the best interest of the Government, he/she will obtain the advice
of OGC with respect to the procedures for paying the lien in full and
having the mortgage released or assigned to the Government. The County
Supervisor or District Director will obtain from the lienholder a
statement of the amount owed and request payment to the lienholder in
accordance with RD Instruction 2024-A (available in any Agency Office)
which will be charged to the inventory account as a nonrecoverable cost.
(Revised 08-05-98 PN 294.)

§ 1955.68 [Payment of taxes]{.underline}.

Property acquired by the Agency is subject to taxation by State and
local political jurisdictions in the same manner and to the same extent
as other property of the same kind, unless State law specifically
exempts property owned by the Government from taxation. Where
jurisdictions change their law or codes to begin taxing Government-owned
property, only taxes accruing after the effective date of the change may
be paid. A State supplement may be issued with the advice of OGC to
cover individual State laws. The servicing official shall notify the
appropriate taxing authority(ies) in writing when title to real estate
is acquired by the Government and shall advise that claims for taxes, if
applicable, during the Government\'s ownership should be billed to the
Agency at the County Office or District Office address. When inventory
property is taxable, payment will be as follows:

## 27

## (Revision 3)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§ 1955.68 (Con.)

\(a\) [Suitable or program property]{.underline}. When property is
suited for program purposes, the payment of taxes will be paid in
accordance with RD Instruction 2024-A (available in any Agency Office)
charging them as recoverable costs to the inventory account. If property
was acquired subject to a prior lien, the prior lienholder will be
contacted before submitting a voucher to see if that lienholder will pay
the taxes. (Revised 08-05-98, PN 294.)

\(b\) [Surplus property]{.underline}. When inventory property acquired
under provisions of the CONACT is classified as surplus, taxes will be
paid as outlined in paragraph (a) of this section.

\(c\) [Nonprogram (NP) housing property]{.underline}. When property is
classified as NP and the value is limited to the extent that taxes which
accrue before disposal may exceed the value of the property, payment of
taxes will be deferred until the property is sold. If the taxing
authority schedules a tax sale before the Agency can sell the property,
the value will be weighed against the taxes and the decision made
whether to pay the taxes and continue sales efforts or to let the
property go for the delinquent taxes. The decision made should be that
which is in the Government\'s best financial interest.

§ 1955.69 [Insurance]{.underline}.

Insurance in force at the time property is acquired will not be
cancelled; however, no additional premiums will be paid, except as
follows:

\(a\) If organization-type property is operated by the Government after
acquisition, workman\'s compensation coverage will be obtained. If the
property is located in a flood-hazard area and operation of the property
continues, flood insurance will be continued in force. Premiums will be
paid in accordance with RD Instruction 2024-A, (available in any Agency
Office) and charged to the inventory account as a recoverable cost.
(Revised 08-05-98 PN 294.)

\(b\) If there is an outstanding claim at the time of acquisition, it
will be handled in accordance with subpart A or B of part 1806 of this
chapter (RD Instruction 426.1 or 426.2). If property was acquired
subject to a prior lien, the servicing official shall advise the prior
lienholder that the Government does not intend to carry insurance,
except as provided in paragraph (a) of this section. If, however, the
prior lienholders mortgage requires the borrower to carry insurance, the
Agency may provide the required insurance, if necessary, to prevent
foreclosure by the prior lienholder.

## 28

## (Revision 3) 

RD Instruction 1955-B

§ 1955.70 [Inspection of property]{.underline}.

The servicing official shall inspect property as necessary to protect
the Government\'s interest. Farm property will be inspected at least
annually to determine if adequate measures are in effect to conserve the
soil, maintain its fertility, and control erosion. Inspection will be
made

## 28A

## (Added 08-05-98, PN 294)

(10-14-88) SPECIAL PN

§1955.70 (Con.) RD Instruction 1955-B

in connection with travel for other purposes, wherever possible, and
documented in the inventory file.

§1955.71 [Vandalism or theft]{.underline}.

\(a\) [Reporting]{.underline}. Willful damage to or theft of inventory
or custodial property will reported to local law enforcement officials
by the servicing official. A written report will be sent to the State
Director with a copy to the Regional Office of the USDA Office of
Inspector General (OIG).

\(b\) [Other actions]{.underline}. The servicing official will cooperate
with local law enforcement officials to attempt to resolve the incident.
This includes signing complaints and testifying at hearings or trials
under the jurisdiction of the local law enforcement system. Civil
actions and prosecution under Federal criminal statutes will be
processed through OGC in coordination with OIG. The State Director,
after consulting OGC as necessary, will provide advice and assistance to
the servicing official.

\(c\) [Repair of damage due to vandalism or theft]{.underline}. Repairs
necessary because of vandalism or theft will be accomplished on
inventory property in accordance with §1955.64 of this subpart. Repairs
of damage to custodial property will be limited as outlined in §1955.55
(c) of this subpart and obtained as outlined in §1955.55 (d) of this
subpart.

§1955.72 [Utilization of inventory housing by Federal Emergency
Management Agency (FEMA) or under a Memorandum of Understanding between
the Agency and the Department of Health and Human Services (HHS) for
transitional housing for the homeless]{.underline}. (Revised 6-12-89,
SPECIAL PN.)

\(a\) [FEMA]{.underline}. By a Memorandum of Understanding between the
Agency and FEMA, inventory housing property not under lease or sales
agreement may be made available to shelter victims in an area designated
as a major disaster area by the President. See Exhibit A of this
subpart. Authority is hereby delegated to the State Director to
implement this Memorandum of Understanding; the State Director may
redelegate this authority to County Supervisors or District Directors.

\(b\) [HHS]{.underline}. By a Memorandum of Understanding between the
Agency and HHS, inventory housing property not under lease or sales
agreement may be made available by lease to public bodies and nonprofit
organizations to provide transitional housing for the homeless. See
Exhibit D of this subpart. Authority is hereby delegated to the State
Director to implement this Memorandum of Understanding; and the State
Director may redelegate this authority to County Supervisors

## 29

## (Revision 3)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§1955.72 (b) (Con.)

or District Directors. Copies of all executed leases and/or questions
regarding this program should be referred by State Offices to the Single
Family Housing Servicing and Property Management (SFH/SPM) Division in
the National Office.

§§1955.73 - 1955.79 \[Reserved\]

§1955.80 [Management of inventory chattel property]{.underline}.

Inventory chattel property will be disposed of as soon after acquisition
as possible. Holding of chattel property for more than\
60 days must be approved in writing by the State Director. Normally,
chattel property will not be leased, except as provided in paragraph (c)
of this section.

\(a\) [Care of inventory chattel property]{.underline}. When the
servicing official determines that inventory chattel property should be
cared for by contract, the necessary services will be obtained in
accordance with the provisions of this section and RD Instruction
2024-A.

(Revised 6-12-89, SPECIAL PN.)

\(b\) [Contracting for services]{.underline}. Services such as
transportation, care, storage, and harvest of crops will be obtained in
accordance with RD Instruction 2024-A. (Revised 6-12-89, SPECIAL PN.)

\(c\) [Lease of chattel property]{.underline}. Chattels which are
essential to the operation of a farm, such as bulk milk tanks, pumps,
and center-pivot sprinkler systems may be leased along with the real
property. The lease amount will be based on documented comparable rental
rates and the amount will be specified in the lease agreement. The
lessee will be responsible for maintenance and repairs during the lease
term. Repair costs will be limited to those essential under the terms of
the lease, to place the equipment in operational condition. When a
lessee cannot or will not make needed repairs, the servicing official
will contact the State Director for guidance on economic feasibility.
(Revised 11-03-93, SPECIAL PN.)

\(d\) [Documenting and reporting inventory transactions]{.underline}.
The servicing official is responsible for documenting and reporting
inventory chattel transactions.

\(1\) [Losses and increases]{.underline}. Increases in inventory
resulting from the birth of livestock will be noted on the original list
of acquired chattel property in the inventory file, as well as any
losses. These entries will be dated.

\(2\) [Sales]{.underline}. All sales of chattel property will be
reported on either Form RD 1955-50A, \"Advice of Inventory Property
Sold - Credit Sale,\" or Form RD 1955-50B, \"Advice of Inventory

## 30

## (Revision 3) 

RD Instruction 1955-B

§1955.80 (d)(2) (Con.)

Property Sold - Cash Sale/Transfer - Acquired Property,\" in accordance
with the respective FMI and subpart C of this part and recorded on the
original list of acquired chattel property in the inventory file.
(Revised 06-28-95, PN 247.)

30A

(Added 06-28-95, PN 247)

(10-14-88) SPECIAL PN

RD Instruction 1955-B

§1955.81 [Exception authority]{.underline}.

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 the
recommendation of the appropriate program Assistant Administrator or
upon a 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.

§1955.82 [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 regulation to provide guidance to Agency officials. State
supplements applicable to MFH must have prior approval of the National
Office; others may receive post approval. Requests for approval for
those affecting MFH must include complete justification, citations of
State law, and an opinion from OGC.

§§1955.83 - 1955.99 \[Reserved\]

§1955.100 [OMB control number]{.underline}.

The collection of information requirements in this regulation have been
approved by the Office of Management and Budget and assigned OMB control
number 0575-0110.

## [EXHIBITS TO SUBPART B]{.underline}

All exhibits are available in any Agency Office. Exhibit B is also
published in the Code of Federal Regulations.

Exhibit A - Memorandum of Understanding Between the Federal

Emergency Management Agency and the Farmers Home

Administration.

Exhibit B - Notification of Tribe of Availability of Farm

Property for Lease or Purchase.

Exhibit C - Cooperative Agreement (Example).

Exhibit D - Fact Sheet - The Federal Interagency Task Force on

Food and Shelter for the Homeless

## oOo

## 

## 31

## (Revision 2)

(10-14-88) SPECIAL PN

Exhibit A in PDF ONLY.

Attachment to 1 & 2 to Exhibit A in PDF ONLY.

RD Instruction 1955-B

Exhibit B

## 

## NOTIFICATION OF TRIBE OF AVAILABILITY OF

## FARM PROPERTY FOR PURCHASE

## (To Be Used By FSA to Notify Tribe )

FROM: County official

TO: (Name of Tribe and address)

SUBJECT: Availability of Farm Property for Purchase

\[To be Used within 90 days of acquisition\]

Recently the Farm Service Agency (FSA) acquired title to acres of farm
real property located within the boundaries of your Reservation. The
previous owner of this property was
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_. The property is available for
purchase by persons who are members of your tribe, an Indian Corporate
entity, or the tribe itself. Our regulations provide for those three
distinct priority categories which may be eligible; however, you may
revise the order of the priority categories and may restrict the
eligibility to one or any combination of categories. Following is a more
detailed description of these categories:

1\. Persons who are members of your Tribe. Individuals so selected must
be able to meet the eligibility criteria for the purchase of Government
inventory property and be able to carry on a family farming operation.
Those persons not eligible for FSA\'s regular programs may also purchase
this property as a Non-Program loan on ineligible rates and terms.

2\. Indian corporate entities. You may restrict eligible Indian
corporate entities to those authorized by your Tribe to purchase lands
within the boundaries of your Reservation. These entities also must meet
the basic eligibility criteria established for the type of assistance
granted.

3\. The Tribe itself is also considered eligible to exercise their right
to purchase the property. If available, Indian Land Acquisition funds
may be used or the property financed as a Non-Program loan on ineligible
rates and terms.

We are requesting that you notify the local FSA County Office of your
selection or intentions within 45 days of receipt of this letter,
regarding the purchase of this real estate. If you have questions
regarding eligibility for any of the groups mentioned above, please
contact our office. If the Tribe wishes to purchase the property, but is
unable to do so at this time, contact with the FSA County Office should
be made.

Sincerely,

County official

## oOo

(08-20-97) PN 280

RD Instruction 1955-B

Exhibit C

## COOPERATIVE AGREEMENT (EXAMPLE)

## United States Department of Agriculture

## Farmers Home Administration

## Agency Agreement No. [1)]{.underline}\_\_\_\_\_\_\_\_\_\_\_

THIS AGREEMENT, made this\_\_\_\_\_ day of\_\_\_\_\_\_\_\_\_\_\_\_\_\_,
19\_\_\_, by and between United States Department of Agriculture,
(Agency name) , herein after called "Agency", and
[2)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
called
[3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

WITNESSETH THAT:

WHEREAS, Agency has the authority pursuant to sections 510(e) and 517(i)
of the Housing Act of 1949\* to expend funds to protect the
Government\'s interest in acquired property and to protect the
Government\'s security interest for loans made out of the Rural Housing
Insurance Fund, and

WHEREAS, In
[4)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ located
in\_\_\_\_\_\_\_\_\_ County,

\_\_\_\_\_\_\_\_\_\_\_\_\_, Agency has acquired title to approximately
[5)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ and in order to protect
this property, it is necessary to

[6)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

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

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

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,

and

WHEREAS, [3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_ has rights of entry
to the streets and easements within
[4)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ and has the
authority to construct, alter and repair these streets and easements,
and [3)]{.underline}\_\_\_\_\_\_\_\_\_\_ is willing to cooperate with
Agency in the mutual goal of

[7)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,

to provide housing for low- and moderate-income families;

NOW THEREFORE, in consideration of the premises and of the several
promises to be faithfully performed by the parties hereto as set forth
and for the mutual benefit of restoring
[4)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ as a viable
community, Agency and
[3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ agree as
follows:

A. It is agreed that the following described work (the \"work\" herein),
being
[8)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

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

is to be constructed by publicly advertised contract at an estimated
cost of \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

\*Modification required for programs not covered by the Housing Act.

(6-12-89) SPECIAL PN

RD Instruction 1955-B

Exhibit C

Page 2

Agency Agreement No. \_\_\_\_\_\_[(1)]{.underline}\_\_\_\_\_\_\_

Page 2 of 5

B. In carrying out this agreement,
[3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_ shall use their own management
procedures which apply applicable state and local laws and regulations,
provided that procurements for Federal Assistance Programs conform to
the standards set forth in Office of Management and Budget Circular A-87
and applicable Federal law.

Furthermore, [3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_ will, at no
expense to Agency, for that work for which Agency agrees to pay:

1\. Draft plans, specifications and drawings as will be necessary for
the contemplated work which shall be subject to Agency approval.

2\. Appoint a Contracting Officer and authorized representative who
shall have authority to act for the Contracting Officer listing their
duties, responsibilities and authority, and furnish such information in
writing to Agency.

3\. Provide necessary facilities, technical and clerical personnel and
legal counsel for arranging for and carrying out the installation of the
works of improvement described in Paragraph A.

4\. Issue an invitation for bids which shall contain requirements
including drawings and specifications and general provisions.

5\. Receive, protect and open bids. Determine the lowest qualified
bidder and with written concurrence from Agency, award contract.

6\. Secure written concurrence of Agency before approving performance
and payment bonds.

7\. Secure written concurrence of Agency before issuing notice to
proceed.

8\. Secure written concurrence of Agency before giving consent for the
contractor to assign the contract or assign any monies due or to become
under the contract.

9\. Secure written concurrence of Agency before waiving the requirement
for any material certification.

10\. Secure written concurrence of Agency before modifying the contract
or before issuing orders to the contractor for suspension or resumption
of work for extensions of contract time.

RD Instruction 1955-B

Exhibit C

Page 3

Agency Agreement No.\_\_\_\_\_\_[(1)]{.underline}\_\_\_\_\_\_\_

Page 3 of 5

11\. Promptly forward to Agency all
[3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ approved invoices
submitted for payment as governed by this agreement.

12\. Dispose of all claims resulting from the contract; secure prior
written concurrence of Agency when Agency funds are involved.

13\. Take reasonable and necessary action to dispose of all contractual
and administrative issues arising out of the contract awarded by this
agreement. This includes but is not limited to disputes, claims,
protests of awards and legal actions. Agency will advise and consult
with [3)]{.underline}\_\_\_\_\_\_\_\_ on any such matters in which
Agency could have financial interest.

14\. Hold and save Agency free from any and all claims or causes of
actions whatsoever resulting from the obligations undertaken by
[3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ under this agreement.

15\. Secure written concurrence of Agency before terminating the
construction contractor\'s right to proceed and declaring the contractor
in default.

16\. Take necessary legal action including bringing suit to collect from
the contractor and any monies due in connection with the contract or
upon request of Agency. Upon request of Agency, assign and transfer to
Agency and any or all claims, demands and causes of action of every kind
whatsoever which the County has against the contractor or his sureties.

17\. Arrange for and conduct final inspection of completed works of
improvement to determine whether all work has been performed in
accordance with contractual requirements. Secure written concurrence of
Agency prior to notifying the construction contractor of the acceptance
of the job.

18\. On completion acceptance of all work when provided by the terms of
the contract obtain a written release from the contractor of all claims
against [3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ arising
by virtue of the contract.

19\. Retain all records dealing with the award and administration of the
contract for 3 years of the date of
[3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ submission of the final
request for payment from Agency or until final litigation of claims or
audit findings have been resolved whichever is longer. Make such records
available to the Comptroller General of the United States or duty
authorized representatives of the Comptroller General and accredited
representatives of the Department of Agriculture.

(6-12-89) SPECIAL PN

RD Instruction 1955-B

Exhibit C

Page 4

Agency Agreement No. \_\_\_\_\_\_[(1)]{.underline}\_\_\_\_\_\_\_

Page 4 of 5

20\. Comply with Federal Executive Order 11246 which is made a part of
this agreement by reference; comply with the non-discrimination
provision of the Equal Employment Opportunity clause.

C. Agency will, upon request of
[3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_;

1\. Provide the direct cost of construction of work as described. The
cost of this work, excluding the related cost of
[9)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

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

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

is not to exceed \$\_\_\_\_\_\_\_, without written amendment to this a
agreement.

2\. Provide authorization assistance such as estimates of contract
costs, length of contract period, results of tests and studies, site
investigation, design layout, drawings and specifications.

3\. Counsel with [3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_ in preparing
the invitation for bids and awarding and administering the contract.

4\. Provide the service of a Government representative.

5\. Disburse funds covering the items described in paragraph C 1.,
within 30 days of receipt of invoices as provided by paragraph B 11., by
forwarding a check made payable to
[3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_ for their disbursement to the
appropriate payees.

D. It is mutually agreed that:

1\. This agreement shall be governed by Office of Management and Budget
Circular A-87 (46 Fed. Reg. 9584, January 28, 1981).

2\. This agreement shall be null and void 180 calendar days after the
date [3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_ has executed this
agreement in the event that a construction contract(s) has (have) not
been awarded.

3\. The contract for construction described in Section A will not be
awarded to a firm in which any official of
[3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_ or any member of such official\'s
immediate family has a direct or indirect interest in the profits or
contracts of such firms. Agency may terminate this agreement in whole or
in part when it is determined by Agency that
[3)]{.underline}\_\_\_\_\_\_\_\_\_\_ has failed to comply with the
conditions of this agreement. Agency shall promptly notify
[3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_ in writing of the determination
and reasons for termination together with the effective date.

RD Instruction 1955-B

Exhibit C

Page 5

Agency Agreement No.\_\_\_\_\_\_[(1)]{.underline}\_\_\_\_\_\_\_\_

Page 5 or 5

4\. This agreement may be temporarily suspended by Agency if it
determines the corrective action by
[3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ is needed to meet the
provisions of this agreement.

5\. Agency may make adjustments in the estimated cost to
[3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ as set forth in A for
the work. Such adjustments may increase or decrease the amount of
estimated funds which are related to differences between such estimated
cost and the amount of the awarded contract or to changes, differing
site conditions, quantity variations, or other actions taken under the
provisions of the contract. No adjustment shall reduce funds below the
amount required to carry out the contract, however, Agency shall retain
the right to refuse to approve the award of the contract should price
exceed estimates.

6\. In the event of default, any excess cost collected from the
defaulting contractor, or his surety, will be utilized for the
completion of this project.

E. [3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_ will upon the completion
of the herein described work immediately, in good faith, accept the
roads and streets, utility systems, or other public areas or facilities
of [4)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_ into the Highway
System,\_\_\_\_\_\_\_\_\_\_\_\_\_\_Sewer System or other appropriate
acquisition and maintenance entity of
[3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

IN WITNESS WHEREOF the authorized representation of the parties hereto
have affixed their hands and seals, the day and date first above.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ U.S. Department of
Agriculture

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Rural Development

By:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (SEAL)
By:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Name

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Name
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Title

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Title

Contracting Officer

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

(6-12-89) SPECIAL PN

RD Instruction 1955-B

Exhibit C

Page 6

Insertion Guidance for blank spaces:

1\) Agency contract number.

2\) Full legal name of State or local government or agency.

3\) Short name or initials of 2).

4\) Name of subdivision or area.

5\) Number and type of property.

6\) General description of work.

7\) Enter mutual purpose, such as, \"providing sanitary sewage

facilities to residents in compliance with State Health Department

letter of October 31, 1983.\"

8\) Describe each element of work, or reference and attach

specifications.

9\) Enter any work, materials, specification drafting, etc., which is

to be contributed by 3).

RD Instruction 1955-B

Exhibit D

FACT SHEET

THE FEDERAL INTERAGENCY TASK FORCE ON FOOD AND SHELTER FOR THE HOMELESS

In April 1984, a Task Force on Food and Shelter for the Homeless was
established under the President\'s Council on Private Sector
Initiatives. This Task Force, which includes representation from several
Government Agencies including Rural Development, is responsible for
developing and examining Federal resources such as Government inventory
properties which may be utilized by the homeless. A memorandum of
Understanding was established between the Department of Agriculture and
the Department of Health and Human Services to make available vacant
single family houses, by lease, to public bodies and nonprofit
organizations for transitional housing for the homeless. In lieu of cash
rent, the entity is required to maintain the property, pay real estate
taxes and maintain property insurance.

Rural Development is committed to work with community based
organizations in this regard to the extent practicable.

[General Guidelines]{.underline}

1\. Only Nonprogram (NP) Rural Development inventory properties are
available for lease. Program and NP properties may be purchased by
public bodies and nonprofit, and will be sold in accordance with the
applicable sections of 7 CFR Part 1955, Subpart C (RD Instruction
1955-C).

2\. Leases of NP properties will be for a period of up to 10 years. A 10
year lease may be necessary for the public body or nonprofit
organization to obtain transitional housing funds from the Department of
Housing and Urban Development (HUD).

[Rural Development responsibilities]{.underline}

1\. Upon request from a public body or nonprofit organization, Rural
Development will provide a list of all inventory properties available
for sale. The list will clearly identify which properties are classified
as \"program\" and \"NP.\" The list will be provided regardless of
whether the properties are listed for sale with real estate brokers.

2\. If a public body or nonprofit organization approaches Rural
Development to lease a specific property, upon written notification of
intent to lease, Rural Development will withdraw the property from sale
for a period not to exceed 30 days to provide such entity with the
opportunity to execute a formal lease. Rural Development will make a
determination as to repairs and/or renovations necessary for the
property to meet \"Decent, Safe and Sanitary\" (DSS) standards except
for the thermal performance standards. Repairs/renovations will be
limited to those necessary to remove health and safety hazards and
provide adequate, safe and operable heating, plumbing, electrical, water
and waste disposal systems. Cosmetic repairs such as painting,

(6-12-89) SPECIAL PN

RD Instruction 1955-B

Exhibit D

Page 2

landscaping, floor covering, etc., will not be considered unless they
present health or safety hazard. If Rural Development determines the
proposed repairs/renovations are reasonable in cost, Rural Development
will contract to have said work performed upon execution of a formal
lease. If repairs/renovations costs are excessive the public body or
nonprofit organization will be asked to select another property for
lease. If no such properties are available, and none are expected in the
foreseeable future, the State Office will obtain further guidance from
the Single Family Housing Servicing and Property Management (SFH/SPM)
Division in the National Office.

3\. Rural Development will inspect the property after the lease is
executed to ensure the property is being maintained and used for its
intended purposes. Inspections will be made at least yearly.

[Public Body or Nonprofit Organization Responsibilities]{.underline}

1\. Contact Rural Development when interested in leasing or purchasing
Rural Development inventory property to provide transitional housing for
the homeless.

2\. When leasing is contemplated, provide Rural Development with
documentation of the need for this type housing in the community and
planned use. Documentation should include verification of the need for
the type housing, financial statements verifying the entity\'s ability
to make cosmetic repairs, if needed, maintain the property, pay
utilities, real estate taxes, insurance, etc., proposed use of the
property, sample lease or occupancy agreement for potential occupants,
nondiscrimination policy, etc. The public body or nonprofit organization
should provide all necessary documentation to Rural Development to
assure success of the project.

3\. Use any property in a prudent manner for its intended purpose.
Maintain the property in good condition, ensuring the exterior and lot
are maintained consistent with other properties in the area. Comply with
all State and local laws, ordinances, etc, regarding use of residential
property. Maintain adequate records relating to the use of the property.
Allow Rural Development to inspect the property at reasonable times and
review records to ensure the property is being utilized for its intended
use.

4\. When the need for such property no longer exists, advise Rural
Development of intent to terminate the lease. Return the property in the
same or better condition than when the lease was executed.

## oOo 

Attachment 1 to Exhibit D in PDF ONLY.

RD Instruction 1955-B

Exhibit D

Attachment 2

## LEASE OF SINGLE FAMILY DWELLING

THIS LEASE is made and entered into this\_\_\_\_\_\_ day
of\_\_\_\_\_\_\_\_\_, 19\_\_, by and between the United States of
America acting through Rural Development (hereinafter referred to as
\"LESSOR\") and
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
(hereinafter referred to as \"LESSEE\").

[RECITALS]{.underline}:

UNDER PROVISIONS OF the Housing Act of 1949, as amended, and in keeping
with agreements with the Federal Interagency Task Force on Food and
Shelter for the Homeless to provide transitional housing for the
homeless in rural areas, AND, in consideration of the covenants and
agreements herein contained to be done, kept and performed, the parties
hereto agree as follows:

1\. [Premises]{.underline}. LESSOR hereby leases the PREMISES, known as
\_\_\_\_\_\_\_\_\_\_

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

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

City of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ County of
\_\_\_\_\_\_\_\_\_\_\_\_\_\_, State of\_\_\_\_\_\_\_\_\_\_\_\_, to
LESSEE and LESSEE hereby leases the PREMISES from LESSOR for the term
and upon the covenants and conditions set forth herein.

2\. [Term]{.underline}. The term of this lease shall be for a period
of\_\_\_\_\_( ) year(s) commencing on the\_\_\_\_\_\_\_\_\_\_day
of\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, 19\_\_\_, and ending on the last
calendar year of\_\_\_\_\_\_\_\_\_\_\_, 19\_\_\_, unless terminated
under any applicable provisions or this Lease. This lease may be
extended on a month-to-month basis after the termination date of this
lease with prior written consent of the LESSOR and LESSEE.

3\. [Payments]{.underline}. In consideration of ONE DOLLAR, in hand paid
at the time of execution of this lease, and the following requirements
to be performed by LESSEE, LESSOR agrees it will have received adequate
compensation from LESSEE, and LESSEE agrees to the following:

a\. LESSEE shall pay LESSOR the pro-rated portion of taxes and
assessments levied on the PREMISES during the term of this lease and any
renewed term. Payment shall be made not later than 1 month before the
due date of such taxes.

b\. Within forty-five (45) days after execution of this lease, or other
reasonable time period mutually agreed to in writing between the parties
herein, the LESSEE, at the LESSEE\'s sole expense, shall make any
further repairs, with prior approval of the LESSOR, as LESSEE determines
necessary to make the property habitable.

(6-12-89) SPECIAL PN

RD Instruction 1955-B

Exhibit D

Attachment 2

Page 2

c\. LESSEE, at its sole expense, shall ensure the PREMISES are
maintained, repaired, and kept in a clean sanitary condition during the
term of this lease.

d\. LESSEE shall be responsible for all utility costs incurred on the
PREMISES during the term of this Lease.

4\. [Use]{.underline}. The LESSEE shall utilize the premises only for
the purpose of providing transitional housing for homeless persons and
will not charge such persons a rental or occupancy charge greater than
the costs incurred by LESSEE in compliance with the provisions of
paragraph 3, plus a reasonable amount for administrative costs.

5\. [Hold Harmless]{.underline}. The LESSEE shall indemnify and save
harmless the LESSOR, its officers, agents, servants and employees from,
all liability under the Federal Tort Claims Act (62 Stat. 869, 982; 28
U.S.C. Sec. 2071, 2680) or otherwise, for death or injury to all
persons, or loss or damage to the property of all persons resulting from
use of the premises by the LESSEE, its sublessees or licensees. Further,
LESSEE will save the LESSOR harmless from all fines, penalties, and
costs for violation or noncompliance with any of said laws,
requirements, or regulations, and from all liability arising out of any
such violation or noncompliance.

6\. [Damage Or Destruction]{.underline}. In the event any damage or
destruction to the property shall be caused by its acts or neglect of
its sublessees or licensees, the LESSEE shall forthwith repair such
damage at its own expense, and should the LESSEE fail or refuse to make
such repairs within a reasonable time after the occurrence of such
damage, the LESSOR may at Lessor\'s option terminate this Lease, make
such repairs and charge the cost thereof to the LESSEE, and the LESSEE,
shall thereupon reimburse the LESSOR for the total cost of all damages
so caused. In the event LESSEE insures the PREMISES against loss by fire
and other hazards, LESSOR shall be named as a co-beneficiary. Further,
in the event that the PREMISES are damaged or destroyed through no act
nor neglect of LESSEE its sublessees and licensees and are rendered
untenable, this Lease shall be terminated upon receipt of written notice
of either party to the other.

7\. [Delivery Of Possession]{.underline}. At the end of the term of this
Lease, LESSEE shall surrender said premises vacant to the LESSOR and in
a habitable condition as defined in paragraph 3. b. except if the lessor
so directs it will be boarded up and secured. No alteration, addition,
or improvements shall be made in or to the premises without the consent
of the LESSOR in writing, except for maintenance items, and all
additions and improvements made by the LESSEE shall belong to the
LESSOR. All goods and chattels placed or stored in or about the premises
are at the risk of the LESSEE.

8\. [LESSOR\'S Remedies]{.underline}. The LESSEE further agrees that if
it should fail to comply with any or all provisions of this agreement,
then in any of said cases, it shall be lawful for the LESSOR, at its
election or option, to re-enter and take possession, the LESSEE hereby

RD Instruction 1955-B

Exhibit D

Attachment 2

Page 3

expressly waiving any and all notices to vacate said premises, and
thereupon this lease shall absolutely terminate; however, the failure of
the LESSOR to insist upon the strict performance of the terms,
covenants, agreements and conditions herein contained, or any of them,
shall not constitute or be construed as a waiver or relinquishment of
the LESSOR\'S right thereafter to enforce any such term, covenant,
agreement, or condition, but the same shall continue in full Force and
effect.

9\. [No Member Of Congress To Benefit]{.underline}. No member of, or
Delegate to Congress, or Resident Commissioner shall be admitted to any
share or part of this lease or to any benefit that may arise therefrom.

10\. [Warranty Against Use Of Agents]{.underline}. The LESSEE warrants
that it has not employed any person to solicit or secure this lease upon
any agreement for a commission, percentage, brokerage or contingent fee.
Breach of this warranty shall give the LESSOR the right to annul this
lease or in its discretion to recover from the LESSEE the amount of such
commission, percentage, brokerage or contingent fee in addition to the
consideration herein set forth.

11\. [Nondiscrimination]{.underline}. The LESSEE agrees not to
discriminate against any employee or applicant for employment, or
against any individual seeking housing, because of race, color,
religion, national origin, sex, marital status, handicap, or age.

THIS LEASE contains the entire agreement between the parties hereto, and
neither party is bound by any representations or agreements of any kind
except as herein contained.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,\_\_[LESSEE]{.underline}
RURAL DEVELOPMENT, LESSOR

By:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
By:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

State Director

(Typed Name) (Title) (Typed Name)

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

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

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

(Address) (Address)

Telephone:(\_\_)\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Telephone:(\_\_)\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(6-12-89) SPECIAL PN