Dennis and Dorinda J. Jelle - Page 5




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               market value of your real estate securing the loan if                  
               you sell it within 10 years of the agreement.  FmHA can                
               never recapture more than it wrote off.                                
               Petitioners elected to proceed with the buyout at net                  
          recovery value.  In order to do so, they obtained a loan from the           
          State Bank of Mt. Horeb.  On July 30, 1996, petitioners paid to             
          FmHA the net recovery value of $92,057.  Prior to the making of             
          this remittance, the balance owed by petitioners to FmHA was                
          $269,829.28.  In exchange for the payment, FmHA wrote off the               
          remaining $177,772.28 of indebtedness.                                      
               Then, on July 31, 1996, petitioners and FmHA entered into a            
          Net Recovery Buyout Recapture Agreement.  Pursuant to this                  
          agreement, petitioners covenanted as follows:                               
                    If I/we do sell or convey any part or all of this                 
               real estate within 10 years of this agreement, I/we                    
               must pay FmHA the recapture amount for that part sold                  
               or conveyed which is the smaller of a., b., or c.                      
                    a.   The Fair Market Value of the real estate                     
               parcel at the time of the sale or conveyance, as                       
               determined by an FmHA appraisal, minus that portion of                 
               the recovery value of the real estate * * * or                         
                    b.   The Fair Market Value of the real estate                     
               parcel at the time of the sale or conveyance, as                       
               determined by an FmHA appraisal, minus the unpaid                      
               balance of prior liens at the time of the sale or                      
               conveyance, minus the net recovery value of the real                   
               estate * * * if this amount has not been accounted for                 
               as a prior lien, or                                                    
                    c.   The total amount of the FmHA debt written off                
               for loans secured by real estate.  I/We agree that this                
               amount is the outstanding balance of principal and                     
               interest owed on the FmHA Farmer Programs loans(s) as                  
               of the date of this agreement * * * [without taking                    
               into account the related payment of recovery value],                   





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