(2-6-85, PN 956)
RD Instruction 1942-A
§1942.17 (j)(4)(i)(B) (Con.)
(2) The loan approval official may waive title defects or restrictions, such as utility easements, that do not adversely affect the suitability, successful operation, security value, or transferability of the facility. If the District Director is the loan approval official and is unable to waive the defect or restriction, the title opinion or title insurance binder will be forwarded to the State Director. If the State Director, with the advice of the OGC, determines that the defect or restriction cannot be waived, the defect or restriction must be removed.
(ii) Water rights. When legally permissible, an assignment will be taken on water rights owned or to be acquired by the applicant. The following will be furnished as applicable:
(A) A statement by the applicant's attorney regarding the nature of the water rights owned or to be acquired by the applicant (such as conveyance of title, appropriation and decree, application and permit, public notice and appropriation and use).
(B) A copy of a contract with another company or municipality to supply water; or stock certificates in another company which represents the right to receive water.
(iii) Land purchase contract:
(A) A land purchase contract (known in some areas as a contract for deed) is an agreement between two or more parties which obligates the purchaser to pay the purchase price, gives the purchaser the rights of immediate possession, control, and beneficial use of the property, and entitles the purchaser to a deed upon paying all or a specified part of the purchase price.
(B) Applicants may obtain land through land purchase contracts when all of the following conditions are met:
(1) The applicant has exhausted all reasonable means of obtaining outright fee simple title to the necessary land.
§1942.17 (j)(4)(iii)(B) (Con.) RD Instruction 1942-A
(2) The applicant cannot obtain the land through condemnation.
(3) There are no other suitable sites available.
(Added 03-31-92, SPECIAL PN)
(2-6-85, PN 956)
§1942.17 (j) (4) (iii) (B) (Con.) RD Instruction 1942-A
(4) National Office concurrence is obtained in accordance with paragraph (j)(4)(iii)(D)(2) of this section.
(C) The land purchase contract must provide for the transfer of ownership by the seller without any restrictions, liens or other title defects. The contract must not contain provisions for future advances (except for taxes, insurance, or other costs needed to protect the security), summary cancellations, summary forfeiture, or other clauses that may jeopardize the Government's interest or the purchaser's ability to pay the Rural Development loan. The contract must provide that if the purchaser fails to make payment that Rural Development will be given at least 90 days written notice with an option to cure the default before the contract can be canceled, terminated or foreclosed. Then Rural Development must have the option of making the payment and charging it to the purchaser's account, making the payment and taking over the ownership of the purchase contract, or taking any other action necessary to protect the Government's interest.
(D) Prior to loan closing or the beginning of construction, whichever occurs first, the following actions must be taken in the order listed below:
(1) The land purchase contract and any appropriate title opinions must be reviewed by the Regional Attorney to determine if they are legally sufficient to protect the interest of the Government.
(2) The land purchase contract, the Regional Attorney's comments, and the State Director's recommendations must be submitted to the National Office for concurrence.
(3) The land purchase contract must be recorded.
(5) Lease agreements. Where the right of use or control of real property not owned by the applicant/borrower is essential to the successful operation of the facility during the life of the loan, such right will be evidenced by written agreements or contracts between the owner(s) of the property and the applicant/borrower. Lease agreements shall not contain provisions for restricted use of the site or facility, forfeiture or summary cancellation clauses and shall provide for the right to transfer and lease without restriction. Lease agreements will ordinarily be written for a term at least equal to the term of the loan. Such lease
(2-6-85, PN 956)
RD Instruction 1942-A
§1942.17 (j) (5) (Con.)
contracts or agreements will be approved by the Rural Development loan approval official with the advice and counsel of the Regional Attorney, OGC, as to the legal sufficiency of such documents. A copy of the lease contract or agreement will be included in the loan docket.
(6) Notes and bonds. Notes and bonds will be completed on the date of loan closing except for the entry of subsequent multiple advances where applicable. The amount of each note will be in multiples of not less than $100. The amount of each bond will ordinarily be in multiples of not less than $1,000.
(i) Form RD 440-22, "Promissory Note (Association or Organization)," will ordinarily be used for loans to nonpublic bodies.
(ii) §1942.19 contains instructions for preparation of notes and bonds evidencing indebtedness of public bodies.
(7) Environmental review requirements. Loans made under this subpart must comply with the environmental review requirements in accordance with 7 CFR part 1970. (Revised 04-01-16, SPECIAL PN.)
(8) Health care facilities. The applicant will be responsible for obtaining the following documents:
(i) A statement from the responsible State agency certifying that the proposed health care facility is not inconsistent with the State Medical Facilities Plan.
(ii) A statement from the responsible State agency or regional office of the Department of Health and Human Services certifying that the proposed facility meets the standards in §1942.18 (d)(4)
(9) Public information. Applicants should inform the general public regarding the development of any proposed project. Any applicant not required to obtain authorization by vote of its membership or by public referendum, to incur the obligations of the proposed loan or grant, will hold at least one public information meeting. The public meeting must be held after the preapplication is filed and not later than loan approval. The meeting must give the citizenry an opportunity to become acquainted with the proposed project and to comment on such items as economic and environmental impacts, service area, alternatives to the project, or any other issue identified by Rural Development. The applicant will be required, at least 10 days prior to the meeting, to publish a notice of the meeting in a newspaper of