Section 765.402 - Transfer of security and loan assumption on same rates and termsAn eligible applicant may assume an FLP loan on the same rates and terms as the original note if:
(a) The original borrower has died and the spouse, other relative, or joint tenant who is not obligated on the note inherits the security property;(b) A relative of the borrower or an entity comprised solely of relatives of the borrower assumes the debt along with the original borrower;(c) An individual with an ownership interest in the borrower entity buys the entire ownership interest of the other members and continues to operate the farm in accordance with loan requirements. The new owner must assume personal liability for the loan;(d) A new entity consisting of the same members as the borrower entity buys the borrower entity and continues to operate the farm in accordance with loan requirements; or(e) The original loan is an EM loan for physical or production losses and persons who were directly involved in the farm's operation at the time of the loss will assume the loan. If the original loan was made to:(1) An individual borrower, the transferee must be a relative of the original borrower or an entity in which the entity members are comprised solely of relatives of the original borrower.(2) A trust, partnership or joint operation, the transferee must have been a member, partner or joint operator when the Agency made the original loan or remain an entity comprised solely of people who were original entity members, partners or joint operators when the entity received the original loan.(3) A corporation, limited liability company, cooperative, or other legal business organization, the transferee must: (i) Have been a corporate stockholder, cooperative member or other member of a legal business organization, when the Agency made the original loan or will be an entity comprised solely of entity members who were entity members when the entity received the loan; and(ii) Assume only the portion of the physical or production loss loan equal to the transferee's percentage of ownership. In the case of entity transferees, the transferee must assume that portion of the loan equal to the combined percentages of ownership of the individual stockholders or entity members in the transferee.(f)Application requirements. Transferees must submit a complete application in accordance with § 764.51 of this chapter.(g)Security. All security must be transferred to the transferee with possession taken in accordance with the requirements of part 764 of this chapter for the type of loan being assumed. 72 FR 63309 , Nov. 8, 2007, as amended at 79 FR 60745 , Oct. 8, 2014