Fsa-2681 Land Contract Agreement For Prompt Payment Guarantee

This form is available electronically.

FSA-2681
(07-07-14)

OMB Control No. 0560-0155
OMB Expiration Date: 07/31/2020
See Page 5 for Privacy Act and Paperwork Reduction Act Statements

U.S. DEPARTMENT OF AGRICULTURE
Farm Service Agency

Position 2

LAND CONTRACT AGREEMENT FOR
PROMPT PAYMENT GUARANTEE
This Land Contract Agreement for Prompt Payment Guarantee (hereinafter called "Agreement") is made by and
among (1)
(hereinafter called
"Buyer"), whose address is (2)
,
(3)
(hereinafter called the "Seller"), whose address is
(4)
,
(5)

(hereinafter called "Escrow Agent"), whose address is (6)
and the United States of America acting through the Farm Service Agency of the U.S. Department of Agriculture
(hereinafter called "Agency") whose address is (7)
.
It is understood and agreed between the Buyer, Seller, Escrow Agent and Agency that this Agreement is entered
into for the purpose of the Agency guaranteeing annual amortized installments on the attached Land Contract for
the purchase and sale of real estate in (8)
County, in the State of (9)
,
dated
(10)
entered into by the Buyer and
Seller (“Contract”).
The maximum amount the Agency will pay under this guarantee will be (11) $
,
an amount equal to three amortized annual installments of principal and interest on the Contract, and in addition,
the Agency guarantees three years of real estate taxes and hazard insurance. Principal and interest payments on
the Contract have been amortized over a (12)
-year period with interest accruing at a
maximum of (13)
percent per year. Payments on the Contract are due on or
before (14)
each year.
In consideration of the guarantee of the Land Contract installments by the Agency as provided herein, the Buyer,
Seller, Escrow Agent, and the Agency agree to the following:
1.

Conditions of Guarantee.
A.

This guarantee is supported by the full faith and credit of the United States and is not contestable except
under the circumstance of fraud or misrepresentation of which the Seller has actual knowledge at the
execution of the Agreement or which the Seller participates in or condones.

B.

This guarantee and the Agency’s obligations will terminate at the earliest of the following
circumstances: (1) Full payment of the Contract; (2) Agency payment to the seller of 3 annual
installments plus property taxes and insurance, if applicable, if not repaid in full by the buyer. An
Agency approved repayment plan will not constitute payment in full until such time as the entire
amount due for the Agency approved repayment plan is paid in full; (3) Sale of real estate without
guarantee being properly assigned; (4) The seller terminates the Contract for reasons other than
monetary defaults; or (5) If for any reason the Contract becomes null and void.
If none of the events mentioned above occur, the guarantee will automatically expire, without notice,
10 years from the effective date of the guarantee.

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FSA-2681 (07-07-14) Page 1 of 5

2.

Payment of Claims.
A. The Agency will pay to the Seller through the Escrow Agent the delinquent amortized installment, to the
extent of its delinquency provided:
(1) The Buyer fails to pay an annual amortized installment or a portion of an installment on the Contract
or taxes or insurance when due;
(2) The Escrow Agent makes written demand on the Buyer for payment of the defaulted amount within
30 days of the missed payment, taxes, or insurance and sends a copy of the demand to the Agency,
and to the seller; and
(3) The Escrow Agent makes written demand on the Agency within 90 days from the original payment,
taxes, or insurance due date for the missed payment in the event the buyer has not made the
payment.
B. Loss claim will not be paid if Seller does not have proper title to the property.
C. The Agency may deny a loss claim in whole or in part due to negligence that contributed to the loss
claim. This could include, but is not limited to:
(1) The Escrow Agent failing to seek payment of a missed installment from the buyer within the
prescribed timeframe or otherwise does not enforce the terms of the Contract;
(2) Losing the collateral to a third party, such as a taxing authority, prior lien holder, etc;
(3) Not performing the duties and responsibilities required of the Escrow Agent;
(4) The Seller’s failure to disclose environmental issues; or
(5) Any other action in violation of the Contract or guarantee agreement that does not terminate the
guarantee.

3.

Covenants and Agreements by Buyer.
A. The Buyer agrees to remit principal and interest payment amounts specified in the Contract to the Seller
through the Escrow Agent by the due date.
B. The Buyer hereby authorizes and permits the Agency to make routine inspections of the farm acreage.
C. The Buyer will promptly notify the Agency in writing if the Buyer ceases operating the property, or if
the Buyer's name, location, address, or organizational structure changes.
D. The Buyer will not use the real estate covered by the Contract and this Agreement for a purpose that will
contribute to excessive erosion of highly erodible land or for the conversion of wetland to produce or
make possible the production of an agricultural commodity, as provided in 7 CFR Part 1940, Subpart G,
or any successor regulation.
E. In the event that the Agency pays a defaulted installment or a portion of a defaulted installment under
this Agreement, the Buyer agrees to the following:
(1) Buyer promises to pay the Agency the total amount paid by the Agency to the Seller on behalf of the
Buyer. Once Buyer is notified by the Agency that it has paid a loss claim, this debt is immediately
due and payable to the Agency and accrues interest from the date of advance by the Agency, until
paid in full. Interest on the debt will be at the Agency’s non-program real property loan interest rate
in effect as of the date of the first Agency payment of a loss.
(2) If such a repayment plan can be established and approved by the Agency, the terms of the repayment
plan cannot exceed seven years. Buyer will grant the Agency the best lien obtainable on all the
Buyer's assets, including interest in the real estate being purchased by the Contract. Buyer will

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FSA-2681 (07-07-14) Page 2 of 5

promptly execute and deliver to the Agency all documents deemed necessary by the Agency to fully
evidence and perfect security interests, including but not limited to real estate mortgages, security
agreements, financing statements, and promissory notes.
(3) Buyer acknowledges that any payment made under this Agreement by the Agency on behalf of the
Buyer shall be immediately due and payable after the Agency notifies the Buyer that a loss claim
has been paid to the Seller, and creates a Federal debt owing to the Agency by the Buyer. The
Buyer further acknowledges that the Agency may use all remedies available, including offset under
the Debt Collection Improvement Act of 1996, to collect the resulting Federal debt from the Buyer.
F.
4.

Buyer will not convey or assign the Contract, or any of the Buyer's rights under the Contract, without the
prior written consent of the Agency.

Covenants and Agreements by Seller.
A. Payment by the Agency under this Agreement will cure payment default under the Contract.
B. While this Agreement remains in effect, the Seller will not declare the indebtedness secured by the
Contract to be accelerated, nor will the Seller cancel or exercise any right of forfeiture under the
Contract, without giving 90-day prior written notice to the Agency.
C. If the Contract prohibits the Buyer from granting a security interest without the Seller's consent, the
Seller hereby consents to the Agency taking a security interest in the Contract if payment has been made
by the Agency under this Agreement.
D. Should the Agency obtain the Buyer's interest in the real estate conveyed in the Contract either by
foreclosure or voluntary conveyance, the Seller grants consent to the Agency to transfer the property
subject to the Contract if the Contract prohibits such transfer without the Seller's consent.

5.

Covenants and Agreements by Escrow Agent.
A. The Escrow Agent will receive all principal and interest installments due under the Contract and remit
them to the Seller. Servicing fees will be deducted in accordance with the Escrow Agent’s agreement
with the Seller.
B. The Escrow Agent will maintain a loan accounting and notify the Agency and Seller semiannually, as of
March 31 and September 30, of the outstanding balance on the Contract and the status of payment.
C. The Escrow Agent will notify the Agency and the Seller in the event of default by the Buyer on any
Contract installment, taxes, or insurance payment as set forth in paragraphs 2(A)(2) and (3) above.
D. The Escrow Agent will send a notice of payment due to the Buyer at least 30 days prior to the
installment due date.
E. The Escrow Agent will maintain the original Land Contract Agreement for Prompt Payment Guarantee
executed by all parties and will return the Agreement to the Agency upon its termination.

6.

General Provisions.
A. The Buyer and Seller will pay all Escrow Agent charges in accordance with their written agreement with
the Escrow Agent.
B. The terms of this Agreement supercede and modify any terms of the Contract that are inconsistent with
this Agreement.
C. The covenants, agreements, and representations contained in this Agreement shall be binding upon the
parties, their successors, executors or administrators, receiver, trustees, or assigns.
D. Any notice or demand given in accordance with the terms and provisions of or in connection with this
Agreement shall be in writing or by facsimile transmission, and may be given and shall be conclusively

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deemed and considered to have been given and received two (2) business days following the deposit
thereof, in the U.S. mail, postage prepaid and addressed to any party at its address given at the beginning
of this Agreement; provided, however, that actual notice, however given or received, shall always be
effective.
E. This Agreement may not be amended, altered, or modified except in writing and signed by the Buyer,
Seller, Escrow Agent, and Agency.
F.

The undersigned signing for the Buyer, Seller, Escrow Agent, and Agency represent and warrant that
they are duly authorized and empowered to execute this Agreement for their respective party.

G. The section headings appearing in this Agreement have been inserted for convenience only and shall be
given no substantive meaning or significance whatsoever in construing the terms and provisions of this
Agreement.
H. Notwithstanding the gender actually used, the pronouns used in this Agreement shall be construed as
masculine, feminine, or neuter as occasion may require. Buyer and Seller shall be construed as plural as
the occasion may require.
I.

7.

This Agreement shall be governed by Federal law. In the event that any provision or clause in this
Agreement or the Contract conflicts with the applicable law, such conflict shall not affect other
provisions of this Agreement, which can be given effect without the conflicting provision. This
Agreement shall be subject to all applicable Federal regulations and any future amendments not
inconsistent with the express provisions hereof.

Additional Provisions.
LOSS CLAIMS CAN BE REDUCED OR DENIED IF PARTIES FAIL TO ABIDE BY THE COVENANTS
AND AGREEMENTS ABOVE.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES TO
THIS AGREEMENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES TO THIS AGREEMENT.
In witness whereof, the parties hereto have caused this instrument to be duly executed effective as of
, 20
.

(15)

(16) Buyer's

Signature(s) (include all entity members)

(17) Date

(18) Seller's

Signature (include all entity members)

(19) Date

(20) Escrow

Agent's Signature

(21)

(22) Authorized

Agency Official's Signature

Date

(23) Date

FSA-2681 (07-07-14) Page 4 of 5

NOTE:

The following statement is made in accordance with the Privacy Act of 1974 (5 U.S.C. 552a - as amended). The
authority for requesting the information identified on this form is the Consolidated Farm and Rural Development Act, as
amended (7 U.S.C. 1921 et. seq.). The information will be used to determine eligibility and feasibility for loans and loan
guarantees, and servicing of loans and loan guarantees. The information collected on this form may be disclosed to
other Federal, State, and local government agencies, Tribal agencies, and nongovernmental entities that have been
authorized access to the information by statute or regulation and/or as described in the applicable Routine Uses
identified in the System of Records Notice for USDA/FSA-14, Applicant/Borrower. Providing the requested information
is voluntary. However, failure to furnish the requested information may result in a denial for loans and loan guarantees,
and servicing of loans and loan guarantees. The provisions of criminal and civil fraud, privacy, and other statutes may
be applicable to the information provided.
According to the Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless it displays a valid OMB control number. The valid OMB
control number for this information collection is 0560-0155. The time required to complete this information collection is
estimated to average 2 hours per response, including the time for reviewing instructions, searching existing data
sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.
RETURN THIS COMPLETED FORM TO YOUR COUNTY FSA OFFICE.

In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the
USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from
discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation,
disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or
retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs).
Remedies and complaint filing deadlines vary by program or incident.
Persons with disabilities who require alternative means of communication for program information (e.g., Braille, large print,
audiotape, American Sign Language, etc.) should contact the responsible Agency or USDA’s TARGET Center at (202) 720-2600
(voice and TTY) or contact USDA through the Federal Relay Service at (800) 877-8339. Additionally, program information may be
made available in languages other than English.
To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD-3027, found online at
http://www.ascr.usda.gov/complaint_filing_cust.html and at any USDA office or write a letter addressed to USDA and provide in the
letter all of the information requested in the form. To request a copy of the complaint form, call (866) 632-9992. Submit your
completed form or letter to USDA by: (1) mail: U.S. Department of Agriculture Office of the Assistant Secretary for Civil Rights 1400
Independence Avenue, SW Washington, D.C. 20250-9410; (2) fax: (202) 690-7442; or (3) email: program.intake@usda.gov. USDA
is an equal opportunity provider, employer, and lender.

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