
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 12USC2219a]

 
                       TITLE 12--BANKS AND BANKING
 
                     CHAPTER 23--FARM CREDIT SYSTEM
 
     SUBCHAPTER IV--PROVISIONS APPLICABLE TO TWO OR MORE CLASSES OF 
                       INSTITUTIONS OF THE SYSTEM
 
                          Part G--Miscellaneous
 
Sec. 2219a. Right of first refusal


(a) General rule

    Agricultural real estate that is acquired by an institution of the 
System as a result of a loan foreclosure or a voluntary conveyance by a 
borrower (hereinafter in this section referred to as the ``previous 
owner'') who, as determined by the institution, does not have the 
financial resources to avoid foreclosure (hereinafter in this section 
referred to as ``acquired real estate'') shall be subject to the right 
of first refusal of the previous owner to repurchase or lease the 
property, as provided in this section.

(b) Application of right of first refusal to sale of property

                (1) Election to sell and notification

        Within 15 days after an institution of the System first elects 
    to sell acquired real estate, or any portion of such real estate, 
    the institution shall notify the previous owner by certified mail of 
    the owner's right--
            (A) to purchase the property at the appraised fair market 
        value of the property, as established by an accredited 
        appraiser; or
            (B) to offer to purchase the property at a price less than 
        the appraised value.

                     (2) Eligibility to purchase

        To be eligible to purchase the property under paragraph (1), the 
    previous owner must, within 30 days after receiving the notice 
    required by such paragraph, submit an offer to purchase the 
    property.

                         (3) Mandatory sale

        An institution of the System receiving an offer from the 
    previous owner to purchase the property at the appraised value 
    shall, within 15 days after the receipt of such offer, accept such 
    offer and sell the property to the previous owner.

                         (4) Permissive sale

        An institution of the System receiving an offer from the 
    previous owner to purchase the property at a price less than the 
    appraised value may accept such offer and sell the property to the 
    previous owner. Notice shall be provided to the previous owner of 
    the acceptance or rejection of such offer within 15 days after the 
    receipt of such offer.

              (5) Rejection of offer of previous owner

        (A) Duties of institution

            An institution of the System that rejects an offer from the 
        previous owner to purchase the property at a price less than the 
        appraised value may not sell the property to any other person--
                (i) at a price equal to, or less than, that offered by 
            the previous owner; or
                (ii) on different terms and conditions than those that 
            were extended to the previous owner,

        without first affording the previous owner an opportunity to 
        purchase the property at such price or under such terms and 
        conditions.

        (B) Notice

            Notice of the opportunity in subparagraph (A) shall be 
        provided to the previous owner by certified mail, and the 
        previous owner shall have 15 days in which to submit an offer to 
        purchase the property at such price or under such terms and 
        conditions.

(c) Application of right of first refusal to leasing of property

               (1) Election to lease and notification

        Within 15 days after an institution of the System first elects 
    to lease acquired real estate, or any portion of such real estate, 
    the institution shall notify the previous owner by certified mail of 
    the owner's right--
            (A) to lease the property at a rate equivalent to the 
        appraised rental value of the property, as established by an 
        accredited appraiser; or
            (B) to offer to lease the property at a rate that is less 
        than the appraised rental value of the property.

                      (2) Eligibility to lease

        To be eligible to lease the property under paragraph (1), the 
    previous owner must, within 15 days after receiving the notice 
    required by such paragraph, submit an offer to lease the property.

                         (3) Mandatory lease

        An institution of the System receiving an offer from the 
    previous owner to lease the property at a rate equivalent to the 
    appraised rental value of the property shall, within 15 days after 
    the receipt of such offer, accept such offer and lease the property 
    to the previous owner unless the institution determines that the 
    previous owner--
            (A) does not have the resources available to conduct a 
        successful farming or ranching operation; or
            (B) cannot meet all of the payments, terms, and conditions 
        of such lease.

                        (4) Permissive lease

        An institution of the System receiving an offer from the 
    previous owner to lease the property at a rate that is less than the 
    appraised rental value of the property may accept such offer and 
    lease the property to the previous owner.

                    (5) Notice to previous owner

        An institution of the System receiving an offer from the 
    previous owner to lease the property at a rate less than the 
    appraised rental value of the property shall notify the previous 
    owner of its acceptance or rejection of the offer within 15 days 
    after the receipt of such offer.

              (6) Rejection of offer of previous owner

        (A) Duties of institution

            An institution of the System rejecting an offer from the 
        previous owner to lease the property at a rate less than the 
        appraised rental value of the property may not lease the 
        property to any other person--
                (i) at a rate equal to or less than that offered by the 
            previous owner; or
                (ii) on different terms and conditions than those that 
            were extended to the previous owner,

        without first affording the previous owner an opportunity to 
        lease the property at such rate or under such terms and 
        conditions.

        (B) Notice

            Notice of the opportunity described in subparagraph (A) 
        shall be given to the previous owner by certified mail, and the 
        previous owner shall have 15 days after the receipt of such 
        notice in which to agree to lease the property at such rate or 
        under such terms and conditions.

(d) Public offerings

                 (1) Notification of previous owner

        If an institution of the System elects to sell or lease acquired 
    property or a portion thereof through a public auction, competitive 
    bidding process, or other similar public offering, the institution 
    shall notify the previous owner, by certified mail, of the 
    availability of the property. Such notice shall contain the minimum 
    amount, if any, required to qualify a bid as acceptable to the 
    institution and any terms and conditions to which such sale or lease 
    will be subject.

                            (2) Priority

        If two or more qualified bids in the same amount are received by 
    the institution under paragraph (1), such bids are the highest 
    received, and one of the qualified bids is offered by the previous 
    owner, the institution shall accept the offer by the previous owner.

                        (3) Nondiscrimination

        No institution of the System may discriminate against a previous 
    owner in any public auction, competitive bidding process, or other 
    similar public offering of property acquired by the institution from 
    such person.

(e) Term or condition

    For the purposes of this section, financing by a System institution 
shall not be considered to be a term or condition of a sale of acquired 
real estate.

(f) Financing

    Notwithstanding any other provision of this section, a System 
institution shall not be required to provide financing to the previous 
owner in connection with the sale of acquired real estate.

(g) Mailing of notice

    Notwithstanding any other provision of this section, each certified 
mail notice requirement in this section shall be fully satisfied by 
mailing one certified mail notice to the last known address of the 
previous owner.

(h) State laws

    The rights provided in this section shall not diminish any such 
right of first refusal under the law of the State in which the property 
is located.

(i) Applicability

    This section shall not apply to a bank for cooperatives.

(Pub. L. 92-181, title IV, Sec. 4.36, as added Pub. L. 99-205, title 
III, Sec. 306, Dec. 23, 1985, 99 Stat. 1709; amended Pub. L. 100-233, 
title I, Sec. 108, Jan. 6, 1988, 101 Stat. 1582; Pub. L. 100-399, title 
I, Sec. 104, Aug. 17, 1988, 102 Stat. 990.)


                               Amendments

    1988--Pub. L. 100-233 amended section generally. Prior to amendment, 
section read as follows: ``No institution of the Farm Credit System 
shall sell any real property that previously served as security for a 
loan in a tract larger than a normal family size farm in the vicinity of 
the property for less than the amount it can receive from the Capital 
Corporation.''
    Subsec. (b)(2). Pub. L. 100-399, Sec. 104(a), substituted ``30'' for 
``15''.
    Subsec. (b)(3). Pub. L. 100-399, Sec. 104(b), substituted ``15'' for 
``30''.
    Subsec. (g). Pub. L. 100-399, Sec. 104(c), substituted ``previous 
owner'' for ``former borrower''.


                    Effective Date of 1988 Amendment

    Amendment by Pub. L. 100-399 effective as if enacted immediately 
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988, see 
section 1001(a) of Pub. L. 100-399, set out as a note under section 2002 
of this title.


                             Effective Date

    Section effective thirty days after Dec. 23, 1985, see section 401 
of Pub. L. 99-205, set out as an Effective Date of 1985 Amendment note 
under section 2001 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 2202a, 2279aa-9 of this 
title.
