TN 11 (08-17)

PS 01810.045 South Carolina

A. PS 17-118 Alleged Abandonment of Life Estate Interest in Real Property and Transfer of Property via Quitclaim Deed for Determining Resources of Supplemental Security Income Applicant

Date: July 19, 2017

1. Syllabus

The Regional Chief Counsel (RCC) opinion examines whether the number holder abandoned his life estate interest in real property prior to 2017 and whether the property belonged solely to number holder’s sister prior to the execution of a quitclaim deed in March 2017. The RRC concluded that the information provided is insufficient to find that the number holder abandoned his life estate interest in the property at any time prior to March 2017, when he executed the quitclaim deed. The doctrine of abandonment is generally not applicable under South Carolina law for real property. The quitclaim deed executed by NH to his sister meets all the requirements for a valid transfer of an interest in real property under South Carolina law.

Additionally, if the number holder did not abandon his life estate interest prior to March 2017, can monies expended by number holder’s sister to restore and maintain the property and pay taxes be viewed as a secured loan by number holder’s sister to the number holder in the nature of a mortgage on the property, reducing the value of the number holder’s life estate interest? The RCC found is no basis for construing the expenditures of the number holder’s sister as a secured loan to the number holder for the purpose of reducing the value of his life estate.

2. Opinion

QUESTIONS

You asked whether the number holder abandoned his life estate interest in real property prior to 2017 and whether the property belonged solely to number holder’s sister prior to the execution of a quitclaim deed in March 2017. Additionally, if the number holder did not abandon his life estate interest prior to March 2017, you asked whether monies expended by number holder’s sister to restore and maintain the property and pay taxes can be viewed as a secured loan by number holder’s sister to the number holder in the nature of a mortgage on the property, reducing the value of the number holder’s life estate interest.

OPINION

The information provided is insufficient to find that the number holder abandoned his life estate interest in the property at any time prior to March 2017, when he executed the quitclaim deed. In addition, there is no basis for construing the expenditures of the number holder’s sister as a secured loan to the number holder for the purpose of reducing the value of his life estate.

BACKGROUND

According to a May 1997 Deed of Distribution, the mother of M~, the number holder (NH), died on January XX, 1996. The Deed of Distribution granted NH a life estate in real property located at Y~, South Carolina, with the remainder to his sister.

On March 29, 2017, NH’s sister provided an affidavit related to the period since September 1, 2013. The affidavit indicated that neither NH or his sister have ever resided on the property. At the time of their mother’s death, a renter resided at the property, but the renter subsequently moved out due to the poor condition of the property. NH’s sister averred that, in 2013, no one was renting the property because it had become dilapidated and uninhabitable. NH’s sister alleged that since their mother's death, she had paid all the property taxes, insurance, and maintenance expenses for the property. NH’s sister stated that, in 2013, she decided to remodel the home. She claimed that she expended more than $28,000.00 in renovation costs and the work took 2 years to complete. She alleges that NH did not contribute to the renovations, as he did not have the means to contribute. She stated that she rented the home to a tenant on January XX, 2015. She also averred that she assumed that NH had abandoned his life estate in the property and, thus, was not entitled to any of the rental proceeds. Rather, NH’s sister claimed that she acted as the sole landlord of the property and retained all rental income for herself. In addition to the renovation expenses she paid, NH’s sister alleged that she also paid $5200.00 in property taxes, $4838.56 for insurance, $1214.00 for pest control, $2546.41 for utilities, and $3000.00 for general maintenance and repair, such as yard care and plumbing.

NH applied for Supplemental Security Income (SSI) on September 5, 2013. The Social Security Administration (SSA) found that NH met the medical requirements for SSI, but in a February 2017 notice, SSA notified NH that he did not meet the non-medical rules because his resources were greater than $2000.00. The notice explained to NH that he owned a life estate valued at $28,940.46, which rendered him ineligible for SSI.

On March 3, 2017, NH executed a quitclaim deed transferring all interest and rights he had in the property located at Y~, South Carolina to his sister “for and in consideration of FIVE DOLLARS AND NO/100 ($5.00) dollars, LOVE AND AFFECTION.” The deed was subsequently filed and recorded in the Register of Deeds office in York, South Carolina.

On March 30, 2017, NH filed a request for reconsideration of SSA’s February 2017 resource denial. NH stated that he did not have resources of more than $2000.00 and that in 2013, he gave up the life estate that his mother had left to him because he did not have the resources to maintain the property in a habitable condition.

DISCUSSION

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 Social Security Act (Act) §§ 1602, 1611(a); 20 C.F.R. §§ 416.110, 416.202 (2017). “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 Act § 1613; 20 C.F.R. § 416.1201(a). The Act and regulations establish the dollar amount that an individual’s nonexcluded resources cannot exceed. See Act § 1611(a)(1)(B); 20 C.F.R. § 416.1205(a).

SSA evaluates transfers of resources to determine their validity and effect. See Program Operations Manual System (POMS) SI 01150.001. A valid transfer requires a legally binding agreement and results in the transferor no longer owning the property. See POMS SI 01150.001(B)(1).

The quitclaim deed executed by NH on March XX, 2017, indicates NH and his sister both reside in South Carolina; moreover, the property is located in South Carolina. Therefore, we turn to South Carolina law to determine:

1) whether NH can be found to have abandoned his life estate interest at an earlier date; and,

2) whether expenditures by NH’s sister for maintenance of the property can be charged against the value of NH’s life estate, to reduce his equity, and thus, the value amount of his resources.

The quitclaim deed executed by NH to his sister on March XX, 2017, meets all the requirements for a valid transfer of an interest in real property under South Carolina law. To validly and effectively convey an interest in any land or real estate from one person to another, the deed should identify the grantor, the grantee, and the consideration given in exchange for the transfer, and contain a description of the property being transferred and an affirmative statement by the grantor that he releases all interest in the property to the grantee. See S.C. Code Ann. § 27-7-10 (2017). Additionally, the deed must be executed in the presence of and subscribed by two or more witnesses. See id. In this case, the deed executed by NH identifies NH as the grantor and his sister as the grantee, states that the transfer is made in consideration of five dollars, love, and affection, and contains a detailed description of the property. The deed states that NH relinquished all interest he had in the property to his sister, and the deed was signed by three witnesses. Although not required for a valid transfer of property under South Carolina law, NH’s quitclaim deed was also filed and recorded in the Register of Deeds office in York, South Carolina, giving it additional reliability through public record notice. See Spence v. Spence 628 S.E.2d 869, 876 (S.C. 2006) (holding “[t]he proper execution and delivery of a deed is effective to convey real property from grantor to grantee. As between grantor and grantee, a properly drawn deed is valid and dispositive of their respective ownership and rights in the property regardless of whether the deed is publicly recorded”). Thus, NH validly transferred his interest in the property to his sister as of March XX, 2017, for the sum of five dollars, love and affection.

However, we could find no support for the claim of NH and his sister that he abandoned his interest in the property as early as 2013. The doctrine of abandonment is generally not applicable under South Carolina law for real property, and NH’s life estate interest was not affected or transferred by NH’s “act in departing from the land and leaving it unoccupied, or otherwise ceasing to exercise dominion over it.” Fender v. Heirs at Law of Smashum, 581 S.E.2d 853, 856 (S.C. Ct. App. 2003) quoting Andrews v. McDade, 21 S.E.2d 202, 204 (S.C. 1942); see also Speake v. Kinard, 4 S.C. 54, 58 (S.C. 1872) (holding evidence that widowed life tenant had opportunity for a knowing election to relinquish life estate was required before institution of suit for dower). Although NH did not exercise his rights under his life estate, whether by design or due to inability, he nevertheless retained his life estate interest in the property until he validly transferred that interest through execution of the quitclaim deed on March XX, 2017.

Likewise, there is no basis for finding that the expenditures by NH’s sister for maintenance and renovation of the property were in the nature of a secured loan or mortgage. Nothing in the provided facts indicates any agreement between NH and his sister for such an arrangement. Indeed, both NH and his sister attested that NH had no monetary means by which he could enter into any agreement to repay such a loan or mortgage. All the evidence presented suggests that the monetary expenditures by NH’s sister were either gratuitous or a self-interested effort to protect her remainder interest in the property.

The argument for viewing the expenditures by NH’s sister for improvements as a secured loan or mortgage, reducing the equity value of NH’s property interest, is further undermined by his sister’s affidavit. NH’s sister averred that following her expenditures, she unilaterally rented the property to a tenant, acted as the sole landlord, and accepted all rent payments by the tenant. Despite owning a life estate interest in the property at the time, NH had no part in the rental arrangement and received none of the funds generated by renting the property. Therefore, even if the expenditures by NH’s sister could be viewed as a loan, she has recouped at least some of her expenditures through her sole receipt of rents paid on the property since 2013.

Moreover, South Carolina’s Statute of Frauds states:

No action shall be brought whereby:

. . .

(4) To charge any person upon any contract or sale of lands, tenements or hereditaments or any interest in or concerning them . . .

Unless the agreement upon which such action shall be brought or some memorandum or note thereof shall be in writing and signed by the party to be charged therewith or some person thereunto by him lawfully authorized.

S.C. Code Ann. § 32-3-10 (2017) (emphasis added); see also Fesmire v. Digh, 683 S.E.2d 803, 811 (S.C. Ct. App. 2009) (holding monetary transaction for interest in condominium was subject to Statute of Frauds writing requirement); Prestwick Golf Club, Inc. v. Prestwick Ltd. Partnership, 503 S.E.2d 184, 187 (S.C. Ct. App. 1998) (indicating agreements involving an interest in real property activate the Statute of Frauds, but right to enter land to play golf was a license). Here, there is no collateral writing evidencing NH’s intention to borrow money from his sister to make improvements to the property or to encumber his life estate interest in exchange for such loaned funds. Thus, there is no basis for reducing the value of NH’s life estate based on expenditures made by his sister for maintenance and renovation of the property.

CONCLUSION

The information provided does not establish that NH abandoned his life estate interest in the property prior to March XX, 2017, when he executed the quitclaim deed, which was a valid transfer of real property under South Carolina law. There is also no basis for construing the expenditures of NH’s sister as a secured loan to NH.

Sincerely,

Mary Ann Sloan

Regional Chief Counsel

By: Richard V. Blake

Assistant Regional Counsel