---
kind: "section"
citation: "7 C.F.R. § 763.11"
title: "7"
number: "763.11"
heading: "Maximum loss amount, guarantee period, and conditions."
url: "https://uscodex.org/cfr/7/763.11"
---

# §763.11. Maximum loss amount, guarantee period, and conditions.

- (a) **Maximum loss amount.** The maximum loss amount due to nonpayment by the buyer covered by the guarantee is based on the type of guarantee initially selected by the seller as follows:
  - (1) The prompt payment guarantee will cover:
    - (i) Three amortized annual installments; or
    - (ii) An amount equal to three annual installments (including an amount equal to the total cost of any tax and insurance incurred during the period covered by the annual installments).
  - (2) The standard guarantee will cover an amount equal to 90 percent of the outstanding principal balance.
- (b) **Guarantee period.** The period of the guarantee will be 10 years from the effective date of the guarantee unless terminated earlier under [§ 763.23](/cfr/7/763.23.md).
- (c) **Conditions.** The seller will select an escrow agent to service a Land Contract Agreement if selecting the prompt payment guarantee plan, and a servicing agent to service a Land Contract Agreement if selecting the standard guarantee plan.
  - (1) An escrow agent must provide the Agency evidence of being a bonded title insurance company, attorney, financial institution or fiscally responsible institution.
  - (2) A servicing agent must provide the Agency evidence of being a bonded commercial lending institution or similar entity, registered and authorized to provide escrow and collection services in the State in which the real estate is located.

## Notes

### Authority

Authority: 5 U.S.C. 501 and 7 U.S.C. 1989.

### Source

Source: 76 FR 75430, Dec. 2, 2011, unless otherwise noted.