[Code of Federal Regulations]

[Title 7, Volume 14]

[Revised as of January 1, 2007]

From the U.S. Government Printing Office via GPO Access

[CITE: 7CFR1965.18]



[Page 298]

 

                          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 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.