have you heard the news?Have you heard the news??  
I just wanted to publish some information regarding this new USDA requirement related to outbuildings and farm service buildings.

It’s a relatively new requirement put out by the USDA National Office back on July 22, 2011 and it’s related to outbuildings.  About two months ago, USDA issued Adminstrative Notice (AN 4590) with very little fanfare in the press and I know I haven’t seen really any posts regarding this issue.

Click here to read the entire publication

The biggest provision that is mentioned in the notice is related to what they label as “farm service buildings.”  

USDA defines a farm to be:
  • “a parcel or parcels of land operated for the production of one or more agricultural commodities and which customarily produces or is capable of producing such commodities for sale.”

 


USDA then goes on to define a farm service building to be:

  • “any of the structures used in farming operations, which may include buildings to house workers and their families, or livestock, machinery and crops.  Service buildings can include, but are not limited to, livestock barns and shelters; machinery-and farm supply-storage buildings; buildings and facilities for crop storage, including fodder; and special-purpose structures such as grain silos.”

Now, if you’ve sold homes in rural areas, inevitably you’ve come across a house that might have had an old barn somewhere on the property.  This notice goes on to also state that the property is ineligible for the USDA program not only if it is actively used as a farm operation, but also in cases where the seller may have previously used the property to operate a farm, regardless if the new purchaser intends to use the property as a farm.  

But here’s the kicker! (watch out...opinion is also included)

The property is also ineligible if it contains one or more farm service buildings, even if the buildings have no contributory value!!  So regardless of it’s intended use, or regardless if the building has any value whatsoever, that would make that ‘rural property’ ineligible for the ‘rural development’ program.

Ironic if you ask me???!!!??

barn may disqualify you from using USDA financingYou can have 5.... 10..... even 15 or more acres of land (provided that the value of the land doesn’t exceed 30% of the overall value), but by george, if you have a 50 year old barn on the property, then SORRY CHARLIE!!

While I understand what the’re trying to do, to me it’s a little like throwing the baby out with the bathwater.  They should have approached it more like in-ground pools and put it on a case-by-case basis, based on the commentary of the appraisal or possibly the MLS listing information (if applicable).  

Would love to hear some feedback from both REALTORS and appraisers related to this issue.




Brandon Snider

District Lending Manager

CFM

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Visit my website at www.MortgagesCanBeSimple.com

 

 

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Brandon Snider

Cullman, AL

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