Rd instruction 1924-a table of Contents

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(5-12-87) SPECIAL PN

RD Instruction 1924-A

§1924.5 (f) (2) (Con.)

(viii) Provide the applicant with a written list of changes required in the contract documents. The applicant will submit two complete revised (as requested) sets of contract documents, for approval. On one set, the County Supervisor or District Director will indicate acceptance on each sheet of the drawings, and on the cover of the specifications and all other contract documents. At least the date and the initials of the approval official must be shown. On projects where a consulting architect or engineer has been retained, this acceptance will be indicated only after the State Director has given written authorization. The marked set of documents shall be available at the job site at all times for review by Rural Development. The second set will become part of the loan docket.
(ix) Review the proposed method of doing the work and determine whether the work can be performed satisfactorily under the proposed method.
(x) Instruct the applicant not to incur any debts prior to loan closing for materials or labor or make any expenditures for such purposes with the expectation of being reimbursed from loan funds.
(xi) Instruct the applicant not to commence any construction nor cause any supplies or materials to be delivered to the construction site prior to loan closing.
(xii) Under certain conditions prescribed in Exhibit H of this subpart, provide the applicant with a copy of the leaflet, "Warning - Lead-Based Paint Hazards," which is Attachment 1 of Exhibit H (available in any Rural Development office), and the warning sheet, "Caution Note on Lead-Based Paint Hazard," which is Attachment 2 of Exhibit H (available in any Rural Development office).
(g) Surplus structures and use or sale of timber, sand, or stone. In planning the developments, the applicant and the County Supervisor or District Director should, when practicable, plan to use salvage from old buildings, timber, sand, gravel, or stone from the property. The borrower may sell surplus buildings, timber, sand, gravel, or stone that is not to be used in performing planned development and use net proceeds to pay costs of performing planned development work. In such a case:
(1) An agreement will be recorded in the narrative of Form RD 1924-1 which as a minimum will:


RD Instruction 1924-A

§ 1924.5(g)(1) (Con.)

(i) Identify the property to be sold, the estimated net proceeds to be received, and the approximate date by which the property will be sold.

(ii) Provide that the borrower will deposit the net proceeds in the supervised bank account and apply any funds remaining after the development is complete as an extra payment on the loan, or in accordance with § 1965.13(f) of subpart A of Part 1965 of this chapter for farm program loans.
(2) The agreement will be considered by the Government as modifying the mortgage contract to the extent of authorizing and requiring the Government to release the identified property subject to the conditions stated in the agreement without payment or other consideration at the time of release, regardless of whether or not the mortgage specifically refers to Form RD 1924-1 or the agreement to release.
(3) If the RD loan will be secured by a junior lien, all prior lienholders must give written consent to the proposed sale and the use of the net proceeds before the loan is approved.
(4) Releases requested by the borrower or the buyer will be processed in accordance with applicable release procedures 7 CFR part 3550, as appropriate. (Revised 01-23-03, SPECIAL PN.)
(h) Review prior to performing development work. For the sole benefit of the Agency, prior to beginning development work, the County Supervisor or District Director will review planned development with the borrower. Adequacy of the drawings and specifications as well as the estimates will be checked to make sure the work can be completed within the time limits previously agreed upon and with available bids. Items and quantities of any materials the borrower has agreed to furnish will be checked and dates by which each item of development should be started will be checked in order that the work may be completed on schedule. If any changes in the plans and specifications are proposed, they should be within the general scope of the work as originally planned. Changes must be approved and processed in accordance with §1924.10 of this subpart. The appropriate procedure for performing development should be explained to the borrower. Copies of FmHA forms that will be used during the period of construction should be given to the borrower. The borrower should be advised as to the purpose of each form and at that period during construction each form will be used.


(Revision 1)

(05-12-87) SPECIAL PN

RD Instruction 1924-A

§ 1924.5 (Con.)

(i) Time of starting development work. Development work will be started as soon as feasible after the loan is closed. Except in cases in which advance commitments are made in accordance with 7 CFR part 3550 or according to Section § 1924.13(e)(1)(vi)(A) or § 1924.13(e)(2)(ix)(A) of this subpart, no commitments with respect to performing planned development will be made by the Agency or the applicant before the loan is closed. The applicant will be instructed that before the loan is closed, debts should not be incurred for labor or materials, or expenditures made for such purposes, with the expectation of being reimbursed from loan funds except as provided in subpart A of part 1943 of this chapter, 7 CFR part 3550, and subpart E of part 1944 of this chapter. However, with the prior approval of the National Office, a State Supplement may be issued authorizing County Supervisors to permit applicants to commence welldrilling operations prior to loan closing, provided (1) it is necessary in the area to provide the water supply prior to loan closing, (2) the applicant agrees in writing to pay with personal funds all costs incurred if a satisfactory water supply is not obtained, (3) any contractors and suppliers understand and agree that loan funds may not be available to make the payment, (4) such action will not result under applicable State law in the giving of priority to mechanics and materialmen's liens over the later recorded RHS mortgage, and (5) RHS does not guarantee that the cost will be paid.
(Revised 01-23-03, SPECIAL PN.)
§ 1924.6 Performing development work.
All construction work will be performed by one, or a combination, of the following methods: Contract, borrower, mutual self-help, or owner-builder. All development work must be performed by a person, firm or organization qualified to provide the service. Conditional commitment construction is covered under 7 CFR part 3550. (Revised 01-23-03, SPECIAL PN.)
(a) Contract method. This method of development will be used for all major construction except in cases where it is clearly not possible to obtain a contract at a reasonable or competitive cost. Work under this method is performed in accordance with a written contract.

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