[Code of Federal Regulations]
[Title 7, Volume 14]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1965.18]

[Page 332-333]
 
                          TITLE 7--AGRICULTURE
 
   CHAPTER XVIII--RURAL HOUSING SERVICE, RURAL BUSINESS--COOPERATIVE 
SERVICE, RURAL UTILITIES SERVICE, AND FARM SERVICE AGENCY, DEPARTMENT OF 
                         AGRICULTURE (CONTINUED)
 
PART 1965--REAL PROPERTY--Table of Contents
 
  Subpart A--Servicing of Real Estate Security for Farm Loan Programs 
                    Loans and Certain Note-Only Cases
 
Sec.  1965.18  Transfer of upland cotton, peanut, or tobacco allotments.

    (a) General. Agriculture Stabilization and Conservation Service 
(ASCS) regulations, pursuant to approved legislation, permit the 
transfer of upland cotton, peanut, or tobacco allotments by one or more 
of the following transactions: (1) Sale, (2) lease, or (3) transfer by 
the owner to another farm owned or controlled by the owner. These 
regulations require, among other things, that no allotment be 
transferred from a farm which is subject to a mortgage or other lien, 
unless the transfer is agreed to by the lienholders. It is FmHA or its 
successor agency under Public Law 103-354's policy to approve the 
transfer of any crop allotments permitted by the ASCS regulations if the 
conditions and requirements of this subpart can be met. FmHA or its 
successor agency under Public Law 103-354 personnel should familiarize 
themselves with the States

[[Page 333]]

ASCS policies and requirements concerning the sale, lease, or transfer 
of allotments to assure compliance with established FmHA or its 
successor agency under Public Law 103-354 policies and servicing of 
security.
    (b) Authorization. County Supervisors are authorized to approve a 
transfer of upland cotton, peanut, or tobacco allotment by execution of 
a completed Form FmHA or its successor agency under Public Law 103-354 
465-1. County Supervisors are also authorized to execute the lienholder 
or mortgagee agreement on appropriate ASCS forms provided by ASCS for 
those cases in which a transfer is approved.
    (c) Transfer by sale. Crop allotments enhance the value of a farm 
mortgaged to the FmHA or its successor agency under Public Law 103-354 
and constitute security for the FmHA or its successor agency under 
Public Law 103-354 loan. Accordingly, when a borrower whose farm is 
mortgaged to the FmHA or its successor agency under Public Law 103-354 
inquires about the sale of any of the allotted acres or requests the 
FmHA or its successor agency under Public Law 103-354 to sign the 
required lienholder or mortgagee agreement, the request will be treated 
the same as for a sale of a portion of the security and approval of the 
sale can be granted only in accordance with the applicable conditions 
and requirements of Sec.  1965.13 of this subpart. The sale proceeds may 
be used as authorized in Sec.  1965.13(f) of this subpart.
    (d) Transfer of allotment by lease. The County Supervisor has the 
authority to approve a lease of all or a portion of an allotment for a 1 
year period, provided the lease or its terms will not adversely affect 
the repayment of the loan; leasing is not an alternative to or means of 
delaying liquidation; and the lease and use of proceeds will further the 
objectives of the loan. If a 1 year lease is approved, the lease 
proceeds may be used as farm income as outlined in Sec.  1962.17(b) of 
Subpart A of Part 1962 of this chapter. Leases for a period of more than 
1 year will be granted only with the concurrence of the District 
Director. When a lease is for more than 1 year, an assignment of the 
rental proceeds should be obtained.
    (e) Transfer of allotment by owner to other land owned or controlled 
by the owner. A transfer by an owner to other land owned or controlled 
by the owner is normally interpreted by the ASCS as a permanent transfer 
and can be avoided only by stipulating in the mortgage approval that the 
transfer is to be considered as a lease for the appropriate number of 
years. This type of transfer will be approved only as a lease under 
conditions in paragraph (d) of this section to assure that the crop 
allotment on the security is not adversely affected.