TN 18 (01-20)

PS 01805.048 Texas

A. CPM 19-224 Texas State Law- Equitable Home Ownership (NH M. C~; SSN [redacted])

December 3, 2019

1. Syllabus

In this opinion, the Regional Chief Counsel (RCC) opines on whether non-home real property occupied by a relative must be considered a countable resource for an SSI individual. The RCC examines Agency policy and Texas State laws concerning equitable ownership of property and determines that, based on State law, insufficient evidence exists to indicate that the relative occupying the property has equitable ownership interest in the property. The non-home property in question therefore is not jointly owned and is a resource to the SSI individual.

2. Opinion

QUESTION PRESENTED

You asked us whether L. Z~ (Z~) has equitable ownership of a home owned by M. C~ (NH) located on F~ Drive in Houston, Texas (F~ property). If Z~ is considered a joint owner of the F~ property based on equitable ownership, you also asked whether we can exclude the F~ property from the NH’s resources based on the resource exclusion under 20 C.F.R. § 416.1245, providing that excess real property is not a countable resource if it is jointly owned and if the sale of the property by an individual would cause undue hardship to the other owner due to loss of housing. You also asked us to review Dallas Regional Program Operations Manual Systems (POMS) SI DAL 01130.100 to determine if updates are required.

ANSWER

Based on the information provided, we believe that the agency may reasonably conclude that under Texas law, Z~ did not have equitable ownership of the F~ property. With respect to the NH’s SSI application, the resource exclusion for jointly owned property contained in 20 C.F.R. § 416.1245 does not apply. Specifically, neither the NH nor Z~ have offered evidence of an agreement that Z~ could have legal title transferred to him upon performance of specific conditions, which Texas law requires to establish equitable ownership. Further, the NH and Z~ did not satisfy Section 5.021 of the Texas Property Code that the conveyance of real property must be in writing. In addition, neither the NH nor Z~ offered any evidence that the NH intended to make an oral gift of the F~ property to Z~. Because Z~ does not have equitable ownership of the F~ property, the NH does not jointly own the F~ property and the resource exclusion for jointly owned property does not apply. Instead, the F~ property is considered the NH’s excess real property, and it is a countable resource because it is not the NH’s principal place of residence. Additionally, the guidance provided in Dallas Regional POMS SI DAL 01130.100 remains valid, and we do not believe updates to POMS SI DAL 01130.100 are required at this time.

BACKGROUND

The information you provided shows the NH applied for SSI. When evaluating her application, the agency learned the NH had two properties in her name in Harris County. The Harris County Appraisal District Real Property Account Information lists the NH as the owner of two properties, the F~ property and a home located at N~ Drive in Houston, Texas, which is her principal place of residence. The NH’s spouse died in October 1990. The NH purchased the F~ property for Z~, her brother-in-law, because he had insufficient credit to purchase the property. The Harris County Appraisal District shows the 2017 appraised value of the F~ property was $67,087.

In a Statement of Claimant or Other Person, Z~ stated he was unable to have the F~ property in his name because he did not have adequate credit to purchase it. He stated that the F~ property is his house, he has been fully responsible for the mortgage payments for the last 23 years, and he cannot move. He further stated that the NH was not responsible for the mortgage payments. Z~ submitted mortgage payment receipts from various dates ranging from 2008 to 2019, and a September 2017 statement showing he was delinquent on mortgage payments. Z~ provided a written estimate for foundation repair for the F~ property, but there is no evidence that such repair work was completed. Z~ also provided a 2012 property insurance renewal for the F~ property listing himself and the NH as the insured.

The agency obtained a statement from Z~, but the information you provided did not include a statement from the NH. The field office contacted the NH for additional development in June 2019, but the NH never provided a statement regarding ownership of the F~ property. In a Disability Transmittal dated September 14, 2018, the agency found the NH incapable of managing benefits and appointed O. C~, the NH’s son, as her representative payee. C~ stated that the NH owned the F~ property, but did not live there. C~ also stated that Z~ lived at the F~ property, and made the mortgage payments because the NH owned back taxes on the property.

ANALYSIS

A. Federal Law and Agency Policy on SSI Resources

SSI is a general public assistance program for aged, blind, or disabled individuals who meet certain income and resource restrictions and other eligibility requirements. See 20 C.F.R. §§ 416.110, 416.202. “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 20 C.F.R. § 416.1201(a). A house is a form of real property that may be included as a resource, but there is an exception for an individual’s home. See 20 C.F.R. §§416.1201(a), 416.1212(b). To qualify for the home exclusion, an individual (and spouse, if any) must have an ownership interest in the home and the home must serve as the individual’s principal place of residence. See 20 C.F.R. § 416.1212(a), (c). An individual’s home is excluded as a resource regardless of its value. 42 U.S.C. § 1382b(a)(1), 20 C.F.R. § 416.1212(b). Excess real property which would be a resource under 20 C.F.R. § 416.1201 is not a countable resource for conditional benefit purposes[1] when the individual applying for SSI benefits jointly owns the property and the sale of the property by the individual would cause the other owner undue hardship due to loss of housing. 42 U.S.C. § 1382b(b)(2); 20 C.F.R. § 416.1245.

The agency recognizes three types of real property ownership. The first is fee simple ownership that is an absolute and unqualified legal title to real property. SeePOMS SI 01110.515 A.1. The other two types of ownership, a life estate or an equitable ownership, are considered less than fee simple ownership. A life estate confers certain rights in property for an individual’s lifetime and is usually created through a deed or will or by operation of law. POMS SI 01110.515 A.2.a. Equitable ownership may occur when an individual does not have legal title to the property. See POMS SI 01110.500 B.3.b.; POMS SI 01110.515 A.2.b. An individual may acquire an equitable ownership interest in his or her home through personal considerations or 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.

In order to determine whether the F~ property is excluded or included as a resource for purposes of the NH’s SSI application, we must determine whether the NH and Z~ jointly owned the F~ property under the three types of real property ownership described above. Z~ does not have fee simple ownership of the F~ property because he does not have an absolute and unqualified legal title to it. Z~ does not have a life estate over the F~ property because neither the NH nor Z~ have offered any evidence of a life estate created through a legal document. Moreover, while neither the NH nor Z~ allege that an equitable life estate exists, we next analyze whether the facts alleged support a finding that Z~ has an equitable joint interest in the F~ property.[2] See POMS SI DAL 01130.100 B.2.

Z~’s statement suggests he believes he has an equitable ownership interest in the F~ home. See POMS SI 01130.100 C.4. For example, Z~ alleged that the NH purchased the F~ house for him because he had insufficient credit to purchase property; he lived in the F~ house, and paid the mortgage. The NH’s representative payee C~ stated that the NH owned the F~ property, but did not live there. The NH’s representative payee C~ stated that the NH owned the F~ property and owed back taxes on it, but did not live there. Consistent with Z~’s statement, C~ also stated that Z~ lived at the F~ property, and made the mortgage payments. Because the information provided does not clearly establish that the NH and Z~ had an agreement that Z~ had an equitable ownership interest in the F~ property, we look to state law to determine this issue. Because the NH is a resident of Texas and the home is located in Texas, we look to Texas law to determine whether Z~ has an equitable ownership interest in the home. See POMS SI 01110.500 C.

B. Equitable Ownership Under Texas Law

The NH’s position is that the F~ property should not be included in her resources for SSI purposes because Z~ has an equitable ownership interest in the property. Z~ stated that the NH purchased the property for him because he had insufficient credit.

Under Texas law, to establish that the NH intended to gift equitable title to Z~, the NH has the burden to show: (1) a present gift; (2) donee’s possession under the gift with the donor’s consent; and (3) donee’s permanent and valuable improvements with donor’s consent or other facts demonstrating the donee would be defrauded if the gift were not enforced. In re Estate of McNutt, 405 S.W.3d 194, 196 (Tex. App. –San Antonio 2013, no pet).

Under the first element, to be a present gift, the donor must, at the time he makes it, intend an immediate divestiture of the rights of ownership out of himself and consequent immediate vesting of such rights in the donee.[3] Troxel v. Bishop, 201 S.W.3d 290, 297 (Tex. App. –Dallas 2006, no pet.). Further, Texas law defines equitable ownership as the present right to compel legal title. AHF-Arbors at Huntsville I, LLC v. Walker County Appraisal Dist., 410 S.W.3d 831, 837 (Tex. 2012). A party may have equitable title if its right to compel legal title is entirely within its control. See TRQ Captain’s Landing L.P. v. Galveston Cent. Appraisal Dist., 212 S.W.3d 726, 737 (Tex. App. –Houston [1st Dist.] 2006, aff’d 423 S.W.3d 374 (Tex. 2014) (where tax exempt entity could dissolve subsidiary at any time and articles of organization provided assets reverted to tax exempt entity upon dissolution, tax exempt entity had present right to compel legal title). Equitable title does not follow a mere expectation or a purely contingent interest. See Texas Turnpike Co. v. Dallas County, 271 S.W.2d 400, 402 (Tex. 1954).In Texas Turnpike, the court noted the difference between actual “equitable title,” the right of a grantee or other party to compel the conveyance of legal title by performing some condition, and a merely contingent interest in the property. Id. Courts have defined equitable title as “a right, enforceable in equity, to have the legal title to real estate transferred to the owner of the right upon the performance of specific conditions.” City of Houston v. Guthrie, 332 S.W.3d 578, 588 (Tex. App. –Houston [1st Dist.] 2009, pet denied). Neither the NH nor Z~ has offered evidence of an agreement that Z~ could have legal title transferred to him upon performance of specific conditions.

Moreover, the evidence does not support that the NH made a written conveyance or an oral gift of the property to Z~. Under Texas law, a conveyance of real property must “be in writing” and “subscribed and delivered by the conveyor” or his agent. See Tex. Prop Code § 5.021, see also Tex. Bus. & Com. Code § 26.01(a), (b)(4) (“Statute of Frauds”). An exception to the requirement that a written conveyance exists if an individual establishes the elements of an oral gift of real property in equity. See Estate of Wright, 482 S.W.3d 650, 657 (Tex. App. –Houston [14th Dist.] 2015, pet. denied). Based on the evidence provided, the NH and Z~ have not shown that the NH made an oral gift of the F~ property to Z~. Courts in Texas have found an oral gift of property where the grantor released to the grantee the rights and responsibilities of ownership. See Estate of Wright, 482 S.W.3d at 657 (evidence sufficient to show oral gift of property where donor stated “that was it,” the house was donee’s and at the same time discontinued any additional rent payments from the donee); Troxel v. Bishop, 201 S.W3d at 300 (evidence demonstrated present gift where grantor directed agent to transfer legal interest to grantee by deed). Although Z~ stated he made the mortgage payments, the Harris County Appraisal District record lists the NH as the owner of the F~ property. Texas law provides that the property owner is liable for the taxes on the property it owns. See Tex. Tax Code § 32.07(a). The NH’s responsibility for paying the property taxes indicates that the NH retained the rights and responsibilities of ownership. See Walker v. Walker, 2017 WL 1181359 at *6 (Tex. App. –Houston [14th Dist.] March 30, 2017, no pet.) (no present gift where grantor continued paying property taxes). Therefore, the evidence submitted does not show that the NH intended to release all control of the F~ property to Z~.

In sum, the evidence does not show that Z~ has an equitable interest sufficient to compel transfer of legal title to him. Neither the NH nor Z~ has provided evidence establishing a written conveyance of the F~ property or offered any evidence that the NH intended to make an oral gift of the property to Z~. Whatever possessory interest Z~ has in the F~ property, it does not appear to include the right to compel legal title upon certain conditions. Based upon the evidence submitted, Z~ does not have equitable ownership of the F~ property.

C. Resource Exclusions for Jointly Owned Property and Principal Place of Residence

You also asked whether the F~ property could be excluded from the NH’s resources for purposes of her SSI application under a resource exclusion. As discussed above, Section 416.1245 provides that excess property that would be a resource is not a countable resource if it is jointly owned and the sale of the property by an individual would cause the other owner undue hardship due to loss of housing. 20 C.F.R. § 416.1245. Based on the evidence submitted, Z~ does not have equitable home ownership and would not be considered a joint owner of the F~ property. Therefore, the resource exclusion for jointly owned property under Section 416.1245 does not apply. Moreover, the F~ property is not the NH’s principal place of residence. In order for an individual’s home to be excluded as a resource, the home must be the individual’s principal place of residence. 20 C.F.R. § 416.1212(c); Sanders v. Sullivan, 756 F.Supp. 257, 258 (W.D. Va. 1991) (home not serving as a principal place of residence is a non-excludable resource). Because the F~ property is considered the NH’s excess real property, it is a countable resource.

D. Review of Dallas Regional POMS

You also asked us to review Dallas Regional POMS SI DAL 01130.100 to determine if any updates are required. POMS SI DAL 01130.100 provides that if an individual alleges equitable ownership but has not established an equitable life estate, the district office should obtain signed statements from all individuals involved and seek a legal opinion. Agency policy further provides that when there is variance in state laws with respect to ownership, the specific issues may need to be reviewed by the Regional Office or Regional Counsel. POMS SI 01110.500 C. This guidance remains valid, and we do not believe updates to POMS SI DAL 01130.100 are required at this time.

CONCLUSION

We believe that the agency may reasonably conclude that under Texas law, Z~ did not have equitable ownership of the F~ property and that the resource exclusion for jointly owned property contained in 20 C.F.R. § 416.1245 does not apply. Specifically, neither the NH nor Z~ have offered evidence of an agreement that Z~ could have legal title transferred to him upon performance of specific conditions. Further, the NH and Z~ neither satisfied the requirement under Tex. Prop Code § 5.021 that a conveyance of real property must be in writing, nor offered any evidence that the NH intended to make an oral gift of the F~ property to Z~. Because Z~ does not have equitable ownership of the F~ property, it is not jointly owned and the resource exclusion for jointly owned property under 20 C.F.R. § 416.1245 does not apply. The F~ property is considered the NH’s excess real property, and it is a countable resource because it is not the NH’s principal place of residence. Additionally, the guidance provided in Dallas Regional POMS SI DAL 01130.100 remains valid, and we do not believe updates to POMS SI DAL 01130.100 are required at this time.

 


Footnotes:

[1]

The Commissioner specifies the period of time within which various kinds of property must be disposed of in order not to be included in determining an individual’s eligibility for benefits. See 42 U.S.C. § 1382b(b)(1). Any portion of the individual’s benefits shall be conditioned upon such disposal. Id.

[2]

Generally, a court determines whether an individual has an equitable ownership interest, but under certain circumstances, an agency adjudicator may determine the existence of an equitable ownership interest by following applicable regional instructions. See POMS SI 01110.515 C.3; POMS SI 01130.100 C.4. While the Dallas Region has regional instructions for determining if an individual has an “equitable life estate” in home property, since the parties do not allege an equitable estate, we were asked to provide a legal opinion on whether one existed. See POMS SI 01130.100 C.4l; POMS SI DAL01130.100 B.4.

[3]

Because we find the NH did not intend to gift the F~ property to Z~, and all three elements have to be met, we do not reach the analysis under elements two and three.


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PS 01805.048 - Texas - 01/03/2020
Batch run: 01/03/2020
Rev:01/03/2020