PR 07215.040 Oklahoma

A. PR 00-028 Request for Formal Legal Opinion Regarding Purchase of Property by Representative Payees on Behalf of Minor Children in Oklahoma

DATE: January 15, 1999

1. SYLLABUS

In Region VI (Dallas), the State of Oklahoma permits a minor to hold title to both real and personal property.

2. OPINION

This memorandum is in response to your request for our opinion as to whether children and their parents may use funds obtained from the Social Security Administration for the payment of child's benefits to purchase property, both real and personal, under State law and from this you can determine whether the purchase of this property is consistent with the provisions of Public Law 104-193, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, which places restrictions on the use of retroactive benefits. You asked that the following questions be answered:

1. Does the State permit a minor to hold title to real property or personal property such as an automobile?

2. If so, are there any restrictions as to the age of the minor or the types of property that can be held?

3. Are there any specific requirements on how the property should/must be titled to show the minor as the titleholder?

4. If a State does not permit a minor to hold title to property, or does not permit the property to be titled/registered in the minor's name, what is the preferred method(s) of titling the property to reflect or protect the minor's interest in the property and satisfy SSA's regulatory requirements?

Based on our review of Oklahoma state law, it is our opinion that the state of Oklahoma permits a minor to hold title to property both real and personal. There are no restrictions due to age except that by statute, a court appointed guardian is to handle any minor ward's property, and real property transactions in particular, require express approval from the appropriate court. However, it can also be seen that in practice, minors may still contract to purchase and convey property and their acts are considered valid if not timely disaffirmed. Furthermore, if a minor's incapacity due to age is removed by the appropriate state court, the minor, regardless of age, shall have the capacity to act as an adult. We further believe that there are no specific requirements on how property should be titled to show the minor as the titleholder. The title rests in the name of the minor and not the guardian.

In your request, you stated that due to changes in the operation of Social Security law, parents were receiving large cash payments for back benefits on behalf of their children. You indicated that some parents were using these large sums of money to purchase property such as real estate and motor vehicles. You further indicated that there might be some problem with this use of SSA funds as some state laws do not permit a minor to be shown on a property deed/title unless the property is held in a trust for the child.

Initially, it appears that a minor in Oklahoma would be unable to enter into a contract to purchase real or personal property. A review of case law reveals a decades long contradiction in the courts' findings that contracts made by minors are both void and voidable. Current and past Oklahoma statutes provides that all persons are capable of contracting except for, among others, minors, who are deemed not to have the capacity to contract.1/ See Okla. Stat. Ann. Tit. 15 §11. While all persons without legal disability have the right to contract, "Minors...have only such capacity as is defined by the statutes of this state." See Okla. Stat. Ann. Tit. 15 § 12. The statutes go on to state further that a "minor cannot...make a contract relating to real property, or any interest therein, or relating to any personal property...." See Okla. Stat. Ann. Tit. 15 § 17. Thus, it seems clear that the statutes, similar to statutes which have existed for decades, state that any contract entered into by a minor is void and, therefore, will always be held invalid. However, Oklahoma courts have held that such contracts are void and voidable. See ex. Barbre v. Hood, 214 F. 473 (E.D. Okla. 1914)(contract void); Lawson v. Bridges, 43 P.2d 111 (Okla. 1935)(void); and Warner v. Williams, 12 P.2d 525 (Okla. 1932) (voidable). Even the Courts have recognized that it is difficult to state what the better law is given the numerous contradictory rulings.2/ Perhaps to reflect actual practice and to address the inconsistencies in case law through the years, a current state statute provides that "the contract of a minor may be disaffirmed by the minor himself, either before his majority or within one (1) year's time afterwards.... " See Okla. Stat. Ann. Tit. 15 §19. Consistent with this statute, the Oklahoma Supreme Court recently recognized that a minor can contract for real or personal property and said contract will be upheld provided the minor does not disaffirm the contract within the relevant time period. See Garrison v. Wood, 957 P.2d 129 (Okla. 1997). This decision seems consistent with the case law history which shows that minors have in fact been allowed to contract to both buy and convey real and personal property throughout this century. Thus, we opine that the state of Oklahoma permits a minor to enter into a contract to purchase real or personal property, including the purchase of automobiles, but that such a purchase is subject to disaffirmance. See Gage v. Moore, 198 P.2d 395 (Okla. 1948).3/

A minor beneficiary who is emancipated may also contract to purchase property if that property is "necessary for his support, or that of his family, entered into by him when not under the care of a parent or guardian able to provide for him or them."4/ See Okla. Stat. Ann. Tit. 15 § 20. Thus, should there be a minor receiving child's benefits who is living outside of the home or is married i.e. emancipated5/ and that minor requires certain items that are deemed "necessary for his support" or that of his family, then the minor may contract to purchase those items. The Oklahoma Supreme Court has specifically ruled that an automobile is a necessity for an emancipated worker who needs the vehicle to get to work to support himself and his family.6/ Thus, the state of Oklahoma permits an emancipated minor to hold title to an automobile if that vehicle is used to travel to work in order to support himself or his family.7/

In your second question, you asked whether there were any restrictions on the ability to hold title based on the age of the minor. A review of the Oklahoma statutes and case law fails to reveal any restriction on the ability to hold title to property based on age. This is due in part to the fact that under Oklahoma statutes, the title to property is to be held in the name of the minor owner, but any attempted conveyances must be done by the guardian, sometimes only after approval from a State court of appropriate jurisdiction. We would also note that a minor may also have his disability removed by a court of appropriate jurisdiction. Oklahoma statutes provide that the "district courts shall have authority to confer upon minors the rights of majority concerning contracts..." See Okla. Stat. Ann. Tit. 10 § 91. Notes attached to the statute state that there is no limitation on the age at which majority status may be conferred upon a minor. There is also no limitation mentioned as to the type of property he may hold. Thus, a minor in Oklahoma may hold title to real and personal property at any age although the minor can only enter into transactions concerning that property through a guardian, and only with approval from the appropriate state court particularly as to real property. However, if the minor has his disability of minority removed by the court of appropriate jurisdiction, he may enter into a contract in the same manner as an adult.

In the third question, you indicated you asked whether there were any specific requirements on how property should or must be titled to show the minor as the titleholder. In Oklahoma, it is well established that while a guardian should act on behalf of the minor in regard to the minor ward's property, legal and beneficial title to the property is in the ward rather than the guardian. Freeman v. Brown, 73 F.3d 279, 282-283 (10th Cir. 1996); Hendricks v. Grant County Bank, 379 P.2d 693, 697 (Okla. 1963); La Fortune et. al. v. IRS, 263 F.2d 186, 190 (10th Cir. 1958); Chancellor v. Chancellor, 214 P.2d 261,262 (Okla. 1949). In Freeman the court noted that:

[T]he relation between guardian and ward is not one which gives the guardian the legal title to the ward's estate. The legal, as well as the beneficial title to personal, as well as real, property remains in the ward, and the power of the guardian is naked trust not coupled with an interest."

Freeman v. Brown, 73 F.3d at 283 (citing Title Guar. & Sur. Co. v. Cowen, 177 P. 563, 566 (1919). Thus, the legal and beneficial title to the property of the minor is in the ward rather than the guardian. Hendricks v. Grant County Bank, 379 P.2d at 697 (citing Chancellor v. Chancellor, 214 P.2d at 262). Thus, the property should be held or titled in the name of the minor.

Based on the consequent facts which indicate that parents might be buying and selling property on behalf of the minor, it should be noted that in Oklahoma "no person whether a parent or otherwise has any power as a guardian of property except by appointment which in pertinent situations has to be by a county court." La Fortune et. al. v. IRS, 263 F.2d at 190. Thus, a guardian, even if a parent, cannot convey property. Further, state statutes limit what investments may be made with a minor's property without application to the appropriate court. Of particular note, the guardian may enter into real estate with a mortgage, but the mortgage may be for no more than 50% of the actual value of the property. See Okla. Stat. Ann. Tit. 30 § 4-709A(1). However, upon application to the court, the guardian of the minor upon showing that the minor is in vital need of a home, that he has no suitable homestead, that he has sufficient monthly, semi-annual or annual fixed income to retire an incurred indebtedness for the remaining unpaid cost of the homestead and upon having shown that it is in the best interest of the minor, may receive permission from the court to enter an order authorizing the guardian to execute and deliver a note and mortgage under such terms as the court will approve. The ward is bound by this note and mortgage and may not disaffirm when he reaches the age of majority or otherwise loses his disability.

Further, a guardian is required to act on behalf of the minor until that minor reaches the age of 18 or until the minor attains majority pursuant to the laws of the state. See Okla. Stat. Ann. Tit. 58 § 1221. Other statutes and case law recognize that the power of the guardian appointed for the minor ceases or is suspended by the marriage of the ward. See Okla. Stat. Ann. Tit. 30 s 4-802(A)(3); § 2-113(2). See also Tuck v. Sanders, 244 P. 31, 32 (Okla. 1925) (citing Kirkpatrick v. Burgess, 116 P. 764 interpreting similarly worded state statute).8/ Thus, a minor, if married, is allowed to acquire and dispose of property without a guardian.

Because we have previously stated that a minor may hold title to property both real and personal, in his own name, and there is no special language or method of titling the property, an analysis of your fourth question is not required.

For the above reasons, we believe that the State of Oklahoma permits a minor to hold title to property both real and personal. There are no restrictions due to age except that the minor's property transactions must be performed through a guardian, but the minor's transactions remain valid if he does not disaffirmed his contract within the statutorily provided time limit. Further, if a minor's incapacity due to age is removed by a State court of appropriate jurisdiction, that person, regardless of age, shall have the capacity to act as an adult. We further believe that there are no specific requirements on how property should be titled to show the minor as the titleholder. The title rests in the name of the minor and not the guardian.

1/ Minors are defined as "persons under eighteen (18) years of age." See Okla. Stat. Ann. Tit. 15 § 13.

2/ The difficulty in determining whether a minor can or cannot contract and the State and Federal court's inconsistent holding on this issue was recognized in Drumhiller et. al. v. Norick Motor Co., 289 P. 698, wherein the court noted: "The commentators and text-writers themselves do not agree, and the adjudications are irreconcilable, and some cannot be explained upon any well-established principles of law or equity." See ex. Barbre v. Hood, 214 F. 473 (E.D. Okla. 1914)(contract void); Lawson v. Bridges, 43 P.2d 111 (Okla. 1935), and Warner v. Williams, 12 P.2d 525 (Okla. 1932)(voidable); McElroy v. Calhoun, 57 P.2d 827 (Okla. 1936).

3/ It should be noted that the minor's right to disaffirmance exists even if the parent approved the transaction to purchase. Id.

4/ The policy behind this is to insure that necessities are available to...minors despite their inability to enter into binding agreements for them. In the Matter of the Estate of Mary G