---
kind: "section"
citation: "7 C.F.R. § 1962.18"
title: "7"
number: "1962.18"
heading: "Unapproved disposition of chattel security."
url: "https://uscodex.org/cfr/7/1962.18"
---

# §1962.18. Unapproved disposition of chattel security.

- (a) **General.** When the County Supervisor learns that a borrower has made a disposition of chattel security in a manner not provided for on the applicable Agency form or becomes aware of the misuse of proceeds by a borrower, corrective action must be taken to protect the Government's interest.
- (b) **Notice to borrowers.** When a borrower has not properly accounted for the use of proceeds from the sale of chattel security, the County Supervisor must request restitution by use of a letter similar to Guide Letter 1962-A-5.
  - (1) If the borrower makes restitution or provides sufficient information to enable the County Supervisor to post-approve the transaction on the applicable Agency form, no further action will be taken against the borrower. Post-approval can only be given under the conditions set out in 1962.17(b) of this subpart. Only one such transgression can be allowed in any period covered by the RD 431-2, or other similar plan of operation acceptable to Rural Development, between annual security inspections, whichever is appropriate, and this must be made clear to the borrower.
  - (2) If the borrower does not make restitution, if the County Supervisor cannot post-approve the transaction, or if the borrower makes a second unauthorized disposition of security or a misuse of proceeds after settling the first offense as provided in paragraphs [(a)](#a) and [(b)](#b) of this section, the County Supervisor will proceed in accordance with [§ 1962.49](/cfr/7/1962.49.md) of this subpart.

## Notes

### Amendments

[54 FR 14791, Apr. 13, 1989]

### Authority

Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.

### Source

Source: 50 FR 45783, Nov. 1, 1985, unless otherwise noted.

### Amendments

[54 FR 14791, Apr. 13, 1989]