7 CFR § 765.304 - Unapproved disposition.

---
identifier: "/us/cfr/t7/s765.304"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "7 CFR § 765.304 - Unapproved disposition."
title_number: 7
title_name: "Agriculture"
section_number: "765.304"
section_name: "Unapproved disposition."
chapter_name: "FARM SERVICE AGENCY, DEPARTMENT OF AGRICULTURE"
subchapter_number: "D"
subchapter_name: "SPECIAL PROGRAMS"
part_number: "765"
part_name: "DIRECT LOAN SERVICING—REGULAR"
positive_law: false
currency: "2026-03-24"
last_updated: "2026-03-24"
format_version: "1.1.0"
generator: "[email protected]"
authority: "5 U.S.C. 301 and 7 U.S.C. 1989."
regulatory_source: "72 FR 63309, Nov. 8, 2007, unless otherwise noted."
cfr_part: "765"
---


# 765.304 Unapproved disposition.

(a) If a borrower disposes of chattel security without Agency approval, or misuses proceeds, the borrower must:

(1) Make restitution to the Agency within 30 days of Agency notification; or

(2) Provide disposition or use information to enable the Agency to consider post-approval within 30 days of Agency notification.

(b) Failure to cure the first unauthorized disposition in accordance with paragraph (a) of this section, or a second unauthorized disposition, whether or not cured, constitutes a non-monetary default, will be considered by the Agency when making eligibility determinations for future requests for assistance, may adversely impact such requests, and may result in civil or criminal action.