PS 01805.028 Missouri

A. PS 01-171 Legal Bar to the Sale of a Promissory Note for Real Property Located in Missouri for Purposes of SSI Resource Value

DATE: March 23, 2001


This opinion concerns a promissory note for real property in Missouri which includes the statement that "this note shall not be sold to another entity." Does this statement make the note not negotiable thus causing it to be excluded from SSI resource counting? The opinion concludes that the note is not negotiable, but it is nevertheless assignable and transferable. The holders of the note could assign to a third party the right to receive the remaining payments and thereby convert their interest in the property to cash. Therefore, the note is a countable resource.


You have asked whether the words "[t]his note shall not be sold to another entity" contained in a promissory note owned by SSI claimants constitutes a legal bar to the note's sale, thereby removing the note's value from consideration as a resource for SSI purposes. For the reasons outlined below, we believe you would be justified in finding that the value of the note should be considered as a resource.


According to the regulations a resource is defined as:

(Cash) or other liquid assets or any real or personal property that an individual (or spouse, if any) owns and could convert to cash to be used for his support and maintenance. 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 (or spouse).

20 C.F.R. § 416.1201(a).

According to POMS SI 01140.300 and SI O1120.220, the SSI resource value of the property agreement is assumed to be the outstanding principal balance. However, this assumption can be rebutted if the claimant can provide evidence of a legal bar to the sale of the note.


The material you sent us contains a copy of a promissory note for real property located in Missouri and sold by the claimants, Albert and Dorothey L~, to the debtors, Arthur F~ and Jalene L. M~ for $75,000. It provides that Mr. F~ and Ms. M~ are to pay to the order of the claimants one down payment of $500.00, and to pay the remaining balance in 240 monthly installments of $646.53. The promissory note contains the statement "[t]his note can not be sold to another entity," in different type at the end of the document.


"Negotiable commercial notes represent money, and they are intended to pass from hand to hand as money." H~ v. E~, 81 S.W. 466, 467 (Mo. Ct. App. 1904). H~ involved a promissory note which the court found was not negotiable due to the notation, "This note is not transferable nor to be used as collateral without the written consent of principal and indorsers. And if so used shall be absolutely void." Although the court found that this language destroyed the negotiability of the note, it determined that is was nevertheless assignable and transferable as any other nonnegotiable paper. Id at 467. More recent Missouri cases also reflect that a promissory note that is not negotiable may nevertheless be transferred by assignment. See G~ v. H~, 857 S.W. 2d 260 (Mo. App. 1993); R~ v. F~, 660 S.W.2d 463, 468 (Mo. App. 1983). As a general rule, unless otherwise agreed, any written contract or instrument for the payment of money may be assigned.

Although the L~'s promissory note is not negotiable, they could still assign to a third party their rights to the remaining payments. Thus, they could convert their interest in the property to cash to be used for their support and maintenance. The note is, therefore, a countable resource for SSI purposes.

The only remaining question is the note's value. The value of the note depends upon its marketability. Considering the note is not negotiable, its present market value may be less than the principal balance. However, because the note seems to clearly be worth more than $3,000, we see no need to determine its exact value. We believe it would be reasonable for you to conclude that the note has a market value of at least $3,000 unless the claimants can establish otherwise.

Should the claimants submit evidence indicating a lesser value, you may wish to investigate whether the clause destroying the note's negotiability was on the original note when signed by the debtors and when it was recorded. A notation on the note indicates it is recorded. You may also wish to contact banks and other financial institutions in the area to determine the value of the note.

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PS 01805.028 - Missouri - 04/17/2008
Batch run: 01/27/2009