(a) Transfers of real property acquired by Rural Development.

(1) A request for Rural Development acquisition of real property by a Governor of a State constitutes an agreement by that State to receive said real property and to reimburse Rural Development for the fair market value of said real property for the intended use.

(2) Terms and conditions, including reimbursement terms, for real property transfers shall be set forth in a Real Property Transfer Agreement between the Under Secretary for Rural Development and the appropriate Governor. These terms and conditions will be agreed upon by Rural Development and the State prior to Rural Development attempting to acquire the property. These agreements shall be prepared after consulting with OGC, and forwarded for prior approval by the Rural Development National Office.

(3) All funds from real property transfers received by Rural Development shall be deposited in the U.S. Treasury.

(b) Transfer of real property acquired and/or developed with grant funds from a grant made under this subpart to a person.

(1) Real property acquired and/or developed under this subpart may be transferred to a person for the purposes of construction of privately-owned housing.

(2) All transfers of real property to a person must be approved by the Rural Development State Director of the appropriate State.

(3) Transfer of real property by a recipient of assistance under this subpart to a person must be by contract which: acknowledges the use of funds provided under this subpart to acquire or develop the site; specifies the date of performance prior to delivery of the deed; provides for Rural Development concurrence before changes or modifications; and assures Rural Development that the real property will be used for the purposes under which the grant was made.

(4) Proceeds derived from the sale of land acquired or developed through the use of a grant provided under this subpart must be divided between the grantee and Rural Development on a pro rata basis. A grantee may not recover its cost from sale proceeds to the exclusion of Rural Development. The amount to be returned to Rural Development is to be computed by applying the percentage of the Rural Development grant participation in the total cost of the project to the proceeds from the sale.

(5) All funds received by Rural Development from real property transfers shall be deposited in the U.S. Treasury.