---
kind: "range"
citation: "13 C.F.R. §§ 120.550–120.553"
title: "13"
from: "120.550"
to: "120.553"
count: 4
url: "https://uscodex.org/cfr/13/120.550..120.553"
---

# §120.550. What is homestead protection for farmers?


SBA may lease to a farmer-Borrower the farm residence occupied by the Borrower and a reasonable amount of adjoining property (no more than 10 acres and seven farm buildings), if they were acquired by SBA as a result of a defaulted farm loan made or guaranteed by SBA (see the Consolidated Farm and Rural Development Act, [7 U.S.C. 1921](/usc/7/1921.md), for qualifying loan purposes).


# §120.551. Who is eligible for homestead protection?


SBA must notify the Borrower in possession of the availability of these homestead protection rights within 30 days after SBA acquires the property. A farmer-Borrower must:

- (a) Apply for the homestead occupancy to the SBA field office which serviced the loan within 90 days after SBA acquires the property;
- (b) Provide evidence that the farm produces farm income reasonable for the area and economic conditions;
- (c) Show that at least 60 percent of the Borrower and spouse's gross annual income came from farm or ranch operations in at least any two out of the last six calendar years;
- (d) Have resided on the property during the previous six years; and
- (e) **Be personally liable for the debt.**

# §120.552. Lease.


If approved, the applicant must personally occupy the residence during the term of the lease and pay a reasonable rent to SBA. The lease will be for a period of at least 3 years, but no more than 5 years. A lease of less than 5 years may be renewed, but not beyond 5 years from the original lease date. During or at the end of the lease period, the lessee has a right of first refusal to reacquire the homestead property under terms and conditions no less favorable than those offered to any other purchaser.


# §120.553. Appeal.


If the application is denied, the Borrower may appeal the decision to the D/FA. Until the conclusion of any appeal, the Borrower may retain possession of the homestead property.