§ 2000. — Homestead protection.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC2000]
TITLE 7--AGRICULTURE
CHAPTER 50--AGRICULTURAL CREDIT
SUBCHAPTER IV--ADMINISTRATIVE PROVISIONS
Sec. 2000. Homestead protection
(a) Definitions
As used in this section:
(1) The term ``Administrator'' means the Administrator of the
Small Business Administration.
(2) The term ``borrower-owner'' means--
(A) a borrower of a loan made or insured by the Secretary or
the Administrator who meets the eligibility requirements of
subsection (c)(1) of this section; or
(B) in any case in which an owner of homestead property
pledged the property to secure the loan and the owner is
different than the borrower, the owner.
(3) The term ``farm program loan'' means any loan made by the
Administrator under the Small Business Act (15 U.S.C. 631 et seq.)
for any of the purposes authorized for loans under subchapters \1\ I
or II of this chapter.
---------------------------------------------------------------------------
\1\ So in original. Probably should be ``subchapter''.
---------------------------------------------------------------------------
(4) The term ``homestead property'' means the principal
residence and adjoining property possessed and occupied by a
borrower-owner specified in paragraph (2) of this subsection,
including a reasonable number of farm outbuildings located on the
adjoining land that are useful to the occupants of the homestead,
and no more than 10 acres of adjoining land that is used to maintain
the family of the individual.
(5) The term ``Secretary'' means the Secretary of Agriculture.
(b) Occupancy of homestead upon foreclosure, bankruptcy, or liquidation;
appraisal; period of occupancy
(1) The Secretary or the Administrator shall, on application by a
borrower-owner who meets the eligibility requirements of subsection
(c)(1) of this section, permit the borrower-owner to retain possession
and occupancy of homestead property under the terms set forth, and until
the action described in this section has been completed, if--
(A) the Secretary forecloses, holds in inventory on January 6,
1988, or takes into inventory, property securing a loan made or
insured under this chapter;
(B) the Administrator forecloses, holds in inventory on January
6, 1988, or takes into inventory, property securing a farm program
loan made under the Small Business Act (15 U.S.C. 631 et seq.); or
(C) the borrower-owner of a loan made or insured by the
Secretary or the Administrator files a petition in bankruptcy that
results in the conveyance of the homestead property to the Secretary
or the Administrator, or agrees to voluntarily liquidate or convey
such property in whole or in part.
(2) The value of the homestead property shall be determined insofar
as possible by an independent appraisal made within six months from the
date of the borrower-owner's application to retain possession and
occupancy of the homestead property.
(3) The period of occupancy of homestead property under this
subsection may not exceed five years, but in no case shall the Secretary
or the Administrator grant a period of occupancy less than three years,
subject to compliance with the requirements of subsection (c) of this
section.
(c) Terms and conditions
(1) To be eligible to occupy homestead property, a borrower-owner of
a loan made or insured by the Secretary or the Administrator shall--
(A) apply for such occupancy not later than 30 days after the
property is acquired by the Secretary or Administrator, or for
property in inventory on January 6, 1988, the borrower-owner shall
apply for occupancy not later than 30 days after January 6, 1988;
(B) have received from farming or ranching operations gross farm
income reasonably commensurate with--
(i) the size and location of the farming unit of the
borrower-owner; and
(ii) local agricultural conditions (including natural and
economic conditions), in at least 2 calendar years during the 6-
year period preceding the calendar year in which the application
is made;
(C) have received from farming or ranching operations at least
60 percent of the gross annual income of the borrower-owner and any
spouse of the borrower-owner in at least 2 calendar years during any
6-year period described in subparagraph (B);
(D) have continuously occupied the homestead property during the
6-year period described in subparagraph (B), except that such
requirement may be waived if a borrower-owner has, due to
circumstances beyond the control of the borrower-owner, had to leave
the homestead property for a period of time not to exceed 12 months
during the 6-year period;
(E) during the period of the occupancy of the homestead
property, pay a reasonable sum as rent for such property to the
Secretary or the Administrator in an amount substantially equivalent
to rents charged for similar residential properties in the area in
which the homestead property is located;
(F) during the period of the occupancy of the homestead
property, maintain the property in good condition; and
(G) meet such other reasonable and necessary terms and
conditions as the Secretary may require consistent with this
section.
(2) For purposes of subparagraphs (B) and (C) of paragraph (1), the
term ``farming or ranching operations'' shall include rent paid by
lessees of agricultural land during any period in which the borrower-
owner, due to circumstances beyond the control of the borrower-owner, is
unable to actively farm such land.
(3) For the purposes of paragraph (1)(E), the failure of the
borrower-owner to make timely rental payments shall constitute cause for
the termination of all rights of such borrower-owner to possession and
occupancy of the homestead property under this section. In effecting any
such termination, the Secretary shall afford the borrower-owner or
lessee the notice and hearing procedural rights described in section
1983b \2\ of this title and shall comply with all applicable State and
local laws governing eviction from residential property.
---------------------------------------------------------------------------
\2\ See References in Text note below.
---------------------------------------------------------------------------
(4)(A) The period of occupancy allowed the prior owner of homestead
property under this section shall be the period requested in writing by
the prior owner, except that such period shall not exceed 5 years.
(B) At any time during the period of occupancy, the borrower-owner
shall have a right of first refusal to reacquire the homestead property
on such terms and conditions as the Secretary shall determine, except
that the Secretary may not demand a payment for the homestead property
that is in excess of the current market value of the homestead property
as established by an independent appraisal. The independent appraisal
shall be conducted by an appraiser selected by the borrower-owner from a
list of three appraisers approved by the county supervisor.
(5) No rights of a borrower-owner under this section, and no
agreement entered into between the borrower-owner and the Secretary for
occupancy of the homestead property, shall be transferable or assignable
by the borrower-owner or by operation of any law, except that in the
case of death or incompetency of such borrower-owner, such rights and
agreements shall be transferable to the spouse of the borrower-owner if
the spouse agrees to comply with the terms and conditions thereof.
(6) Not later than the date of acquisition of the property securing
a loan made under this chapter (or, in the case of real property in
inventory on April 4, 1996, not later than 5 days after April 4, 1996),
the Secretary shall notify the borrower-owner from whom the property was
acquired of the availability of homestead protection rights under this
section.
(d) First right of refusal of reacquisition
At the end of the period of occupancy described in subsection (c) of
this section, the Secretary or the Administrator shall grant to the
borrower-owner a first right of refusal to reacquire the homestead
property on such terms and conditions (which may include payment of
principal in installments) as the Secretary or the Administrator shall
determine. Such terms and conditions shall not be less favorable than
those intended to be offered to any other buyer.
(e) Value as measure of reacquisition payment of principal
At the time any reacquisition agreement is entered into, the
Secretary or the Administrator may not demand a total payment of
principal that is in excess of the value of the homestead property as
established under subsection (b)(2) of this section.
(f) Contract authority
The Secretary may enter into contracts authorized by this section
before the Secretary acquires title to the homestead property.
(g) Conflict between Federal and State law
In the event of any conflict between this section and any provision
of the law of any State relating to the right of a borrower-owner to
designate for separate sale or redeem part or all of the real property
securing a loan foreclosed on by the lender thereof, such provision of
State law shall prevail.
(Pub. L. 87-128, title III, Sec. 352, as added Pub. L. 99-198, title
XIII, Sec. 1321, Dec. 23, 1985, 99 Stat. 1532; amended Pub. L. 100-233,
title VI, Sec. 614, Jan. 6, 1988, 101 Stat. 1675; Pub. L. 102-237, title
V, Sec. 501(g), title VII, Sec. 701(h)(2), Dec. 13, 1991, 105 Stat.
1867, 1880; Pub. L. 102-552, title V, Sec. 516(i), (j)(1), Oct. 28,
1992, 106 Stat. 4138; Pub. L. 104-127, title VI, Sec. 644, Apr. 4, 1996,
110 Stat. 1103.)
References in Text
The Small Business Act, referred to in subsecs. (a)(3) and
(b)(1)(B), is Pub. L. 85-536, July 18, 1958, 72 Stat. 384, as amended,
which is classified generally to chapter 14A (Sec. 631 et seq.) of Title
15, Commerce and Trade. For complete classification of this Act to the
Code, see Short Title note set out under section 631 of Title 15 and
Tables.
For definition of ``this chapter'', referred to in subsecs.
(b)(1)(A) and (c)(6), see note set out under section 1921 of this title.
Section 1983b of this title, referred to in subsec. (c)(3), was
repealed by Pub. L. 103-354, title II, Sec. 281(c), Oct. 13, 1994, 108
Stat. 3233.
Amendments
1996--Subsec. (c)(1)(A). Pub. L. 104-127, Sec. 644(1), substituted
``30'' for ``90'' in two places.
Subsec. (c)(6). Pub. L. 104-127, Sec. 644(2), substituted ``Not
later than the date of acquisition of the property securing a loan made
under this chapter (or, in the case of real property in inventory on
April 4, 1996, not later than 5 days after April 4, 1996),'' for
``Within 30 days of the acquisition of the homestead property securing a
loan made or insured under this chapter,'' and struck out at end ``For
property in inventory on January 6, 1988, the Secretary shall make a
good faith effort to notify the borrower-owner of the availability of
homestead protection rights under this section within 60 days after
January 6, 1988.''
1992--Subsec. (a)(4), (5). Pub. L. 102-552, Sec. 516(i),
redesignated par. (4), defining ``Secretary'', as (5).
Subsec. (b)(2). Pub. L. 102-552, Sec. 516(j)(1), substituted
``borrower-owner's'' for ``borrower's''.
1991--Subsec. (a)(2) to (4). Pub. L. 102-237, Sec. 501(g), added
par. (2), redesignated former pars. (2) and (3) as (3) and (4),
respectively, and substituted ``borrower-owner'' for ``borrower'' in
redesignated par. (4).
Subsec. (b)(1). Pub. L. 102-237, Sec. 501(g)(2), substituted
``borrower-owner'' for ``borrower'' wherever appearing.
Subsec. (b)(3). Pub. L. 102-237, Sec. 701(h)(2), struck out ``be''
after ``shall''.
Subsecs. (c), (d), (g). Pub. L. 102-237, Sec. 501(g)(2), substituted
``borrower-owner'' for ``borrower'' wherever appearing.
1988--Subsec. (a)(3). Pub. L. 100-233, Sec. 614(1), inserted ``,
including a reasonable number of farm outbuildings located on the
adjoining land that are useful to the occupants of the homestead, and no
more than 10 acres of adjoining land that is used to maintain the family
of the individual''.
Subsec. (b)(1). Pub. L. 100-233, Sec. 614(2), added par. (1) and
struck out former par. (1) which read as follows: ``If the Secretary
forecloses a loan made or insured under this chapter, the Administrator
forecloses a farm program loan made under the Small Business Act (15
U.S.C. 631 et seq.), or a borrower of a loan made or insured by either
agency declares bankruptcy or goes into voluntary liquidation to avoid
foreclosure or bankruptcy, the Secretary or Administrator may upon
application by the borrower, permit the borrower to retain possession
and occupancy of any principal residence of the borrower, and a
reasonable amount of adjoining land for the purpose of family
maintenance.''
Subsec. (c). Pub. L. 100-233, Sec. 614(3), completely revised and
restated subsec. (c), substituting pars. (1) to (6) for former pars. (1)
to (8).
Subsec. (d). Pub. L. 100-233, Sec. 614(3), inserted at end ``Such
terms and conditions shall not be less favorable than those intended to
be offered to any other buyer.''
Subsecs. (f), (g). Pub. L. 100-233, Sec. 614(4), added subsecs. (f)
and (g).
Effective Date of 1996 Amendment
Amendment by Pub. L. 104-127 effective Apr. 4, 1996, but not
applicable with respect to complete application to acquire inventory
property submitted prior to Apr. 4, 1996, see section 663(a), (c) of
Pub. L. 104-127, set out as a note under section 1922 of this title.
Effective Date of 1992 Amendment
Section 516(j)(2) of Pub. L. 102-552 provided that: ``The amendment
made by paragraph (1) of this subsection [amending this section] shall
take effect at the same time as the amendments made by section 501(f) of
the Food, Agriculture, Conservation, and Trade Act Amendments of 1991
(Public Law 102-237; 105 Stat. 1867) [amending section 1985 of this
title] took effect.''
Effective Date of 1991 Amendment
Amendment by section 701(h)(2) of Pub. L. 102-237 to any provision
specified therein effective as if included in act that added provision
so specified at the time such act became law, see section 1101(c) of
Pub. L. 102-237, set out as a note under section 1421 of this title.
Section Referred to in Other Sections
This section is referred to in section 1991 of this title.
