This Regional Chief Counsel opinion examines whether a SSI applicant has an equitable ownership interest in a mobile home for purposes of determining whether the statutory home exclusion applies. The opinion concludes that the SSI applicant does have equitable ownership interest in the real estate under North Carolina State law.

QUESTION

Whether S~ (Claimant), an applicant for Supplemental Security Income (SSI), has at least an equitable ownership interest in a North Carolina mobile home.

SHORT ANSWER

Yes. Claimant has at least an equitable ownership interest in the mobile home.

BACKGROUND

On June 29, 2018, Claimant protectively filed for SSI. An ALJ found Claimant disabled in a decision dated December 9, 2019.

Claimant resides in a mobile home in Salisbury, North Carolina, which she describes as a three-bedroom Pioneer mobile home, not on a brick foundation.^[1] In her application for SSI, she alleged that she began living in the mobile home on July 1, 2006.^[2] She alleged that she owned the mobile home; however, she stated that legal title for the property remained in the name of E~ (Ms. P).^[3]

Ms. P provided a signed statement that she sold the mobile home to Claimant on a monthly payment basis. Claimant began making monthly payments of $200/month, beginning March 2015. However, Ms. P stated “some months were put on [the] back end due to sickness.” According to Ms. P, Claimant paid $500 in March 2017 and April 2018, “to catch up [on] behind payments.” Ms. P indicated that Claimant made a final payment of $600 in March 2019. Ms. P also reported that Claimant paid the taxes on the mobile home and paid the rent to Ms. P, for the lot on which the mobile home was located.

Claimant submitted a certificate of title for the mobile home, dated November 19, 2003. This certificate, however, is in Ms. P’s name.^[4] Affixed to the copy of the certificate contains what appears to be a post-it with a handwritten note, which states: “Lot XX, [Claimant] owns MH. Pd in full 11-30-18. She [h]as copy of title.” Ms. P signed this post-it notation.

On January 16, 2020, the agency received a letter from Ms. P, who “confirm[ed]” that Claimant owned the mobile home, but that the title was still in Ms. P’s name “due to a family matter.” On February 12, 2020, Ms. P signed a letter indicating that Claimant was the owner of the mobile home “located on lot XX [in NC].” As of the date of the opinion request, February 21, 2020, Ms. P has not transferred the legal title for the mobile home to Claimant.

In her April 2020 report of contact, Ms. P confirmed had the wheels and axles removed from the mobile home when she set it up on the property in 1997. Ms. P stated that she owns the lot where the mobile home is located and has owned it since 1996. She confirmed that Claimant had been a tenant on her property for eight years, but that she did not have a written lease with Claimant for the lot rental. Ms. P stated that Claimant was “a very good tenant.” She described Claimant’s situation as a “rent-to-own” situation, but that she did not have a bill of sale for the transaction between them.^[5]

DISCUSSION

A. Federal Law

SSI is a general public assistance program for aged, blind, or disabled individuals who meet certain income and resource restrictions as well as other eligibility requirements. See 42 U.S.C. § 1382(a); 20 C.F.R. §§ 416.110, 416.202 (2020).^[6] “Resources” include cash or other liquid assets or any real or personal property that an individual owns and could convert to cash to be used for his or her support and maintenance. See 42 U.S.C. § 1382b; 20 C.F.R. § 416.1201(a). “If the individual has the right, authority or power to liquidate the property or his or her share of the property, it is considered a resource. If a property right cannot be liquidated, the property will not be considered a resource of the individual . . . .” 20 C.F.R. § 416.1201(a)(1); accord Program Operations Manual System (POMS) SI 01120.010B.

In determining the resources of an individual, the agency excludes an individual’s home, “including the land appertaining thereto.” 42 U.S.C. § 1382b(a)(1); 20 C.F.R. §§ 416.1210(a), 416.1212. The regulations clarify that a “home is any property in which an individual . . . has an ownership interest and which serves as the individual’s principal place of residence. This property includes the shelter in which an individual resides, the land on which the shelter is located[,] and related outbuildings.” 20 C.F.R. § 416.1212(a).

An individual who does not have legal title to real property may obtain an equitable ownership interest in the real property. The POMS provides that, in general, “existence of an equitable ownership interest is determined by a court of equity,” but “under certain circumstances, an adjudicator can conclude that an equitable ownership interest exists and make a resources determination accordingly.” POMS SI 01110.515.C. An individual may acquire an equitable ownership interest in real property by performing certain activities such as: making mortgage payments or paying property taxes; making or paying for additions to a shelter; or making improvements to a shelter. See POMS SI 01110.515.C.3; see also POMS SI 01130.100.A.4.

We look to state law—the law of the state in which the claimant resides and in which the home is located—to determine whether the claimant had an equitable or other ownership interest in the home. See POMS SI 01110.500(C). Because Claimant resides and the property at issue is located in North Carolina, North Carolina property law controls.

B. North Carolina Law

North Carolina law defines real property, real estate, or land as not only the land itself, but also buildings, structures, improvements, and permanent fixtures on the land, and all rights and privileges belonging or in any way appertaining to the property. N.C. Gen. Stat. § 105-273(13). These real-property terms also include manufactured homes, or mobile homes, as defined in N.C. Gen. Stat. § 143-143.9(6), unless the mobile home is considered tangible personal property for failure to meet all of the following requirements:

1. 1. 

   it is a residential structure;

2. 2. 

   it has the moving hitch, wheels, and axles removed; and

3. 3. 

   it is placed upon a permanent foundation either on land owned by the owner of the manufactured home or on land in which the owner of the manufactured home has a leasehold interest pursuant to a lease with a primary term of at least 20 years and the lease expressly provides for disposition of the manufactured home upon termination of the lease.

N.C. Gen. Stat. § 105-273(13)(d); see alsoHughes v. Young, 444 S.E.2d 248, 250-51 (N.C. App. 1994) (citing Little v. National Serv. Indus., Inc., 340 S.E.2d 510, 513 (N.C. App. 1986) (the test to determine whether a good, which has been annexed to land, has become real property or remains personal property, is the intention with which the annexation was made)).

Without possession of legal title to the real property, North Carolina recognizes an equitable remedy for an individual with “a special right over” a legal estate in possession of another individual. SeeFulp v. Fulp, 140 S.E.2d 708, 712-13 (N.C. 1965).

An equitable lien is applied when one party wrongfully spends another’s funds to improve his own land or when one party expends his own funds to improve land which another has orally agreed to convey to him, but later refuses to do so. It is the unjust enrichment of the title holder which supports the imposition of an equitable lien against his property.

Guy v. Guy, 411 S.E.2d 403, 406-07 (N.C. App. 1991) (citing Fulp, 140 S.E.2d at 713). To recover based upon unjust enrichment, it is enough for an individual to possess a good faith belief that he or she owns or will soon own an interest in the property or the improvements he or she makes to the property promised to him or her. Parslow v. Parslow, 266 S.E.2d 746, 749 (N.C. App. 1980).

C. Analysis

North Carolina law classifies the mobile home in which Claimant resides as real property because it meets all three requirements, discussed above. N.C. Gen. Stat. § 105-273(13)(d). Claimant has used the home as a residential structure since July 2006. See N.C. Gen. Stat. § 105-273(13)(d)(1). Ms. P confirmed she had the mobile home wheels and axles removed in 1997. See N.C. Gen. Stat. § 105-273(13)(d)(2). Finally, the mobile home has been set permanently on the property since 1997, on land owned by Ms. P, who is the title-holder and owner of the mobile home. See N.C. Gen. Stat. § 105-273(13)(d)(3).

Claimant does not currently have legal title to the mobile home, because Ms. P has not properly transferred the certificate of title. However, the agency may exclude the home as a resource if Claimant had an equitable ownership interest in the mobile home during the period that she is eligible for SSI. See 20 C.F.R. §§ 416.1210(a), 416.1212; POMS SI 01110.515.C. The agency granted Claimant’s June 2018 SSI application based on disability in December 2019, after which her income and resources became relevant for the agency to find her eligible for SSI. From June 2018 through the date that Claimant gains legal title to the mobile home, the relevant inquiry period, Claimant has demonstrated that she has equitable ownership interest in the mobile home under North Carolina law. Claimant began living in the mobile home on July 2006 and Ms. P described the arrangement between the two parties as a “rent-to-own” situation. There was no written contract between Claimant and Ms. P, but Ms. P confirmed she sold the mobile home to Claimant on a monthly payment basis. Claimant began making monthly payments toward her purchase of the mobile home in March 2015.

Having entered into an oral agreement to purchase the mobile home from Ms. P; paid most, if not all, of the purchase price of the mobile home;^[7] and paid the taxes for the mobile home, by June of 2018, Claimant had an equitable ownership interest in the mobile home under North Carolina law. SeeGuy, 411 S.E.2d at 406-07. Had Ms. P tried to act against Claimant’s “special right” over the mobile home, Claimant would have had a claim for unjust enrichment against Ms. P. Seeid.; see alsoFulp, 140 S.E.2d at 712. Claimant had a good faith belief that Ms. P intended to sell the mobile home to her and Ms. P confirmed that the parties had made such verbal agreement. SeeParslow, 266 S.E.2d at 749. Claimant gained an equitable lien against the property, an equitable ownership interest, by making monthly payments toward the purchase of the home and paying the taxes for the mobile home on behalf of the legal owner, Ms. P.^[8]

CONCLUSION

Claimant has at least an equitable ownership interest in the mobile home, in which she resides in North Carolina, despite the fact that she does not yet have full title. Claimant’s equitable title should continue until she obtains proper transfer of the certificate of title, at which time she will have legal title to the mobile home.

This opinion examines whether a life estate interest constitutes an “ownership interest” for determining whether the property meets our definition of a “home.” The opinion states that the recipient and her husband’s life estate interest in the property appears legally sufficient under North Carolina law and therefore qualifies as an “ownership interest.” Since the property in question meets our definition of a home, we may apply one of the intent to return exceptions in SI 01130.1005.B, and continue to exclude the property while the recipient lives in an institution, and her husband lives on the property.

QUESTION

You asked whether a life estate interest retained by an SSI recipient and her husband in property they transferred to their daughter is an “ownership interest” for determining whether the property is a “home” for SSI eligibility purposes where Recipient is institutionalized and her husband continues to live on the property.

OPINION

The life estate interest retained by the SSI recipient and her husband is an “ownership interest” for determining whether the property is a “home” for SSI eligibility purposes.

BACKGROUND

Mary (Recipient) currently receives SSI. Recipient and her husband live in North Carolina. In July 2007, Recipient and her husband conveyed their property to their daughter using a North Carolina General Warranty deed. The deed specified that Recipient and her husband conveyed their “remainder interest in the subject property” to their daughter and retained a “life estate interest in the same.” Recipient now lives in an institution and her spouse still lives on the property.

DISCUSSION

Under the Social Security Act (Act), a disabled individual may receive SSI if his or her income and resources do not exceed certain limits. See Act § 1611(a); 20 C.F.R. § 416.202(c), (d) (2012). ^[9] In determining the resources of an individual (and his or her eligible spouse, if any), the Social Security Administration (Agency) generally must exclude the individual’s home. See Act § 1613(a)(1); 20 C.F.R. §§ 416.1210(a), 416.1212(b). “A home is any property in which an individual (and spouse, if any) has an ownership interest and which serves as the individual’s principal place of residence.” 20 C.F.R. § 416.1212(a) (emphasis added). However, when an individual (and spouse, if any) moves out of his or her “home” without the intent to return, the “home” becomes a countable resource because it is no longer the individual’s principal place of residence. 20 C.F.R. § 416.1212(c). “If an individual leaves his or her home to live in an institution, [the Agency] still consider[s] the home to be the individual’s principal place of residence, irrespective of the individual’s intent to return, as long as the spouse . . . of the eligible individual continues to live there.” Id. (emphasis added).

Thus, if the Agency determines property meets the regulatory definition of “home,” the Agency must exclude the individual’s home when the individual leaves the home if one of the exceptions to the principal-place-of-residence requirement applies. Neither the regulations cited above, nor the related Program Operations Manual System (POMS) provisions, addressed below, suggest that an “intent to return” determination turns on the type of ownership interest an SSI recipient has in property that otherwise meets the regulatory definition of “home.”

We turn first to whether North Carolina permitted Recipient and her husband to create a life estate in themselves with a remainder interest to their daughter. The information provided indicates Recipient and her husband have real property in North Carolina and are North Carolina residents. Therefore, we look to North Carolina law to determine if Recipient and her husband could and did properly create a life estate in real property with a remainder interest to their daughter. See Cannuni v. Schweiker, 740 F.2d 260, 264 (3d Cir. 1984) (discussing significance of ownership interest in property and variance in state laws with respect to ownership). The language in the General Warranty Deed establishes that Recipient and her husband have a life estate in the property, a property interest under North Carolina law. Life estates are often created by will or by reservation in a deed conveying real property. See e.g. Brinkley v. Day, 362 S.E.2d 587, 589 (N.C. Ct. App. 1987); Durham v. Creech, 231 S.E.2d 163, 167 (N.C. Ct. App. 1977). North Carolina does not require technical words of conveyance to establish a life estate. See B~, 362 S.E.2d at 589. For instance, a testator can create a life estate for her daughters by providing that her home should be “retained as a house for the girls so long as they (or any one of them) desire (or desires) to live in it regularly.” In re Estate of H~, 301 S.E.2d 720, 650, 652 (N.C. Ct. App. 1983); see also Baggett v. Jackson, 76 S.E. 86, 88 (N.C. 1912) (finding that grantee took an estate in remainder after the death of the husband and the wife where deed by husband and wife conveyed land in fee to wife’s son but provided that “We do except our lifetime on said land.”). Although the deed here is silent as to the rights retained by Recipient and her husband based on their life estate, a life estate vests the life tenant with the right to use and possess the property during his or her lifetime. See B~, 362 S.E.2d at 589. Recipient and her husband’s life estate interest in the property appears legally sufficient under North Carolina law and therefore qualifies as an “ownership interest” under 20 C.F.R. § 416.1212(a).

POMS SI 01130.100 requires the individual to have an ownership interest in property for the Agency to consider the property a home. A life estate meets the definition of an ownership interest because a life estate in a home is a form of legal ownership. See POMS SI 01110.515 (A)(2). Unless a will or a deed establishes that the life estate places restrictions on the life estate owner’s rights, then the owner has the right to possess, use, and obtain profits from the property and sell his or her life estate interest. See POMS SI 01100.515(B)(1)(a). In this case, one of the intent to return exceptions would apply here because Recipient lives in an institution and her spouse still lives on the property. See 20 C.F.R. § 416.1212(c); POMS SI 01130.100(B)(5).

CONCLUSION

For the foregoing reasons, we conclude Recipient and her husband have a life estate in the property and their life estate is an “ownership interest” under the home exclusion.