Requirements for conveying real property. The borrower must supply the Agency with the following:

An Agency application form;

A current financial statement. If the borrower is an entity, all entity members must provide current financial statements;

Information on present and future income and potential earning ability;

A warranty deed or other deed acceptable to the Agency;

A resolution approved by the governing body that authorizes the conveyance in the case of an entity;

Assignment of all leases to the Agency. The borrower must put all oral leases in writing;

Title insurance or title record for the security, if available;

Complete debt settlement application in accordance with subpart B of 7 CFR part 1956 before or in conjunction with the voluntary conveyance offer if the value of the property to be conveyed is less than the FLP debt; and

Any other documentation required by the Agency to evaluate the request.

Conditions for conveying real property. The Agency will accept voluntary conveyance of real property by a borrower if:

Conveyance is in the Agency's financial interest;

The borrower conveys all real property securing the FLP loan; and

The borrower has received prior notification of the availability of loan servicing in accordance with subpart C of this part.

Prior and junior liens. (1) The Agency will pay prior liens to the extent consistent with the Agency's financial interest.

Before conveyance, the borrower must pay or obtain releases of all junior liens, real estate taxes, judgments, and other assessments. If the borrower is unable to pay or obtain a release of the liens, the Agency may attempt to negotiate a settlement with the lienholder if it is in the Agency's financial interest.

Charging and crediting the borrower's account. (1) The Agency will charge the borrower's account for all recoverable costs incurred in connection with a conveyance.

The Agency will credit the borrower's account for the amount of the market value of the property less any prior liens, or the debt, whichever is less. In the case of an American Indian borrower whose loans are secured by real estate located within the boundaries of a Federally recognized Indian reservation, however, the Agency will credit the borrower's account with the greater of the market value of the security or the borrower's FLP debt.

Right of possession. After voluntary conveyance, the borrower or former owner retains no statutory, implied, or inherent right of possession to the property beyond those rights under an approved lease-purchase agreement executed according to § 766.154 or required by State law.