(a) Prior to closing on an acquisition, grant recipients participating in the Community Forest Program must complete the following, which applies to all tracts, including cost share tracts:

(1) Complete an appraisal:

(i) For lands purchased with Community Forest Program funds, the appraisal must comply with Federal appraisal standards prior to the release of the grant funds. The grant recipient must provide documentation that the appraisal and associated appraisal review were conducted in a manner consistent with the Federal appraisal standards.

(ii) For donated cost share tracts, the market value must be determined by an independent appraiser. The value needs to be documented by a responsible official of the party to which the property is donated.

(2) Notify the landowner in writing of the appraised value of the property and that the sale is voluntary. If the grant recipient has a voluntary option for less than appraised value, they do not have to renegotiate the agreement.

(3) Purchase all surface and subsurface mineral rights whenever possible. However, if severed mineral rights cannot be obtained, the grant recipient must follow the retention of qualified mineral interest requirements outlined in the Internal Revenue Service regulations (26 CFR 1.170A-14(g)(4)), which address both surface and subsurface minerals.

(4) Ensure that title to lands acquired conforms to title standards applicable to State land acquisitions where the land is located:

(i) Title to lands acquired using Community Forest Program funds must not be subject to encumbrances or agreements of any kind that would be contrary to the purpose of the Community Forest Program.

(ii) Title insurance must not be a substitute for acceptable title.

(5) The grant recipient must provide all necessary due diligence documentation to regional Forest Service program managers and allow at least 60 days for review and acceptance.

(b) At closing, record a Notice of Grant Requirement with the deed in the lands record of the local county or municipality. This document must:

(1) State that the property (including cost share tracts) was purchased with Community Forest Program funds;

(2) Provide a legal description;

(3) Identify the name and address of the grant recipient who is the authorized title holder;

(4) State the purpose of the Community Forest Program;

(5) Reference the Grant Agreement with the Forest Service (title and agreement number) and the address where it is kept on file;

(6) State that the grant recipient confirms its obligation to manage the interest in real property pursuant to the grant, the Community Forest Plan, and the purpose of the Community Forest Program;

(7) State that the community forest may not be sold and will not be conveyed or transferred to another eligible entity or encumbered in whole or in part, to another party without permission and instructions from the Forest Service; and

(8) State that the grant recipient will manage the interest in real property consistent with the purpose of the Community Forest Program.