Title 7 — AgricultureRelease 119-73
§2000 Homestead protection
Title 7 › Chapter CHAPTER 50— - AGRICULTURAL CREDIT › Subchapter SUBCHAPTER IV— - ADMINISTRATIVE PROVISIONS › § 2000
Summary
Lets certain farmers keep living in their home when the government takes the property because of a farm loan. A few words used here mean: Administrator = head of the Small Business Administration; borrower-owner = the loan borrower or the owner who pledged the home; farm program loan = a loan made under the Small Business Act for farm purposes; homestead property = the main home, nearby buildings used by the family, and up to 10 acres next to the house; Secretary = the Secretary of Agriculture. If the Secretary or the Administrator forecloses, holds, or takes a home into inventory, or gets it through bankruptcy or voluntary conveyance, a qualifying borrower-owner can ask to keep living there. The home must be appraised by an independent appraiser within six months of the request. The stay can last no more than 5 years and no less than 3 years, if the borrower-owner meets rules: apply within 30 days after the government gets the property (or within 30 days after January 6, 1988 for earlier inventory); show farm income that fits the farm’s size and local conditions in at least 2 of the prior 6 years; show farming provided at least 60% of household income in at least 2 of those years; have lived on the property during that 6-year window (short absences up to 12 months can be excused); pay fair rent like local rates; and keep the place in good condition. Missing rent can end the right to stay, but the borrower-owner gets notice and a hearing and state eviction rules apply. A socially disadvantaged farmer or an immediate family member may have first chance to buy the property during occupancy, at no more than the appraised market value (using an appraiser chosen from three names approved by the county supervisor). Rights generally cannot be transferred except to a spouse on death or incapacity if the spouse agrees. The Secretary must notify the borrower-owner when the government acquires the property (or within 5 days for property in inventory on April 4, 1996). At the end of the occupancy, the borrower-owner gets first refusal to buy back the home on terms at least as good as other buyers, and the total principal requested may not exceed the appraised value. The Secretary may make contracts before getting title, and any conflicting state law about separate sale or redemption controls.
Full Legal Text
Title 7, §2000
Agriculture — Source: USLM XML via OLRC
(a)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); 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 11 So in original. Probably should be “subchapter”. I or II.
(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)(1)The Secretary or the Administrator shall, on application by a borrower-owner who meets the eligibility requirements of subsection (c)(1), 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).
(c)(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 22 See References in Text note below. of this title and shall comply with all applicable State and local laws governing eviction from residential property.
(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 of a borrower-owner who is a socially disadvantaged farmer or rancher (as defined in section 2003(e)(2) of this title), the borrower-owner or a member of the immediate family of 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 or immediate family member, as the case may be, 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)At the end of the period of occupancy described in subsection (c), 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)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).
(f)The Secretary may enter into contracts authorized by this section before the Secretary acquires title to the homestead property.
(g)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.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
The Small Business Act, referred to in subsecs. (a)(3) and (b)(1)(B), is Pub. L. 85–536, § 2(1 et seq.), July 18, 1958, 72 Stat. 384, which is classified generally to chapter 14A (§ 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. This chapter, referred to in subsecs. (b)(1)(A) and (c)(6), was in the original “this title”, meaning title III of Pub. L. 87–128, Aug. 8, 1961, 75 Stat. 307, known as the Consolidated Farm and Rural Development Act, which is classified principally to this chapter. For complete classification of title III to the Code, see
Short Title
note set out under section 1921 of this title and Tables. section 1983b of this title, referred to in subsec. (c)(3), was repealed by Pub. L. 103–354, title II, § 281(c), Oct. 13, 1994, 108 Stat. 3233. Codification Pub. L. 110–234 and Pub. L. 110–246 made identical
Amendments
to this section. The
Amendments
by Pub. L. 110–234 were repealed by section 4(a) of Pub. L. 110–246.
Amendments
2008—Subsec. (c)(4)(B). Pub. L. 110–246, § 5305, substituted “period of occupancy of a borrower-owner who is a socially disadvantaged farmer or rancher (as defined in section 2003(e)(2) of this title), the borrower-owner or a member of the immediate family of the borrower-owner” for “period of occupancy, the borrower-owner” and inserted “or immediate family member, as the case may be,” after “selected by the borrower-owner”. 1996—Subsec. (c)(1)(A). Pub. L. 104–127, § 644(1), substituted “30” for “90” in two places. Subsec. (c)(6). Pub. L. 104–127, § 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, § 516(i), redesignated par. (4), defining “Secretary”, as (5). Subsec. (b)(2). Pub. L. 102–552, § 516(j)(1), substituted “borrower-owner’s” for “borrower’s”. 1991—Subsec. (a)(2) to (4). Pub. L. 102–237, § 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, § 501(g)(2), substituted “borrower-owner” for “borrower” wherever appearing. Subsec. (b)(3). Pub. L. 102–237, § 701(h)(2), struck out “be” after “shall”. Subsecs. (c), (d), (g). Pub. L. 102–237, § 501(g)(2), substituted “borrower-owner” for “borrower” wherever appearing. 1988—Subsec. (a)(3). Pub. L. 100–233, § 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, § 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, § 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, § 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, § 614(4), added subsecs. (f) and (g).
Statutory Notes and Related Subsidiaries
Effective Date
of 2008 AmendmentAmendment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, see section 4 of Pub. L. 110–246, set out as an
Effective Date
note under section 8701 of this title.
Effective Date
of 1996 AmendmentAmendment 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 Pub. L. 102–552, title V, § 516(j)(2), Oct. 28, 1992, 106 Stat. 4138, 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 AmendmentAmendment 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.
Reference
Citations & Metadata
Citation
7 U.S.C. § 2000
Title 7 — Agriculture
Last Updated
Apr 6, 2026
Release point: 119-73