You asked whether a January 2015 promissory note and deed of trust prove A~, the number
holder (NH), did not transfer a resource, her house in La Junta, Colorado, for less
than fair market value.
Yes, the promissory note and deed of trust show that the NH received fair market value
for transferring a partial interest in her house in La Junta, Colorado. However, the
NH still has property interests that should be evaluated.
According to the information you provided, at some point before August 2014, T~ gave
title in La Junta, Colorado (the “La Junta house”), to her sister, the NH. The NH
began living in the La Junta house in August, and lived there rent and mortgage free
until December 2014, when she moved in with J~, in Ordway, Colorado (the “Ordway house”).
Because the NH owned the La Junta house, but was not living there, the agency notified
her that she had excess resources. After she was notified she had excess resources,
she sold a percentage interest in the La Junta house to J~’s father for $10,000. She
apparently did not receive $10,000 cash, but instead told the agency that she received
a $10,000 equity stake in the Ordway house in exchange for an ownership interest in
the La Junta house.
While the NH provided a quitclaim deed showing she sold an interest in the La Junta
house, she initially did not provide evidence that she received an interest in the
Ordway house. As a result, the field office concluded she sold the La Junta house
for less than fair market value. Later, the Colorado Cross-Disability Coalition (CCDC)
provided a promissory note and deed of trust. The promissory note states that J~’s
father borrowed and promised to repay the NH $10,000 and that the debt was secured
by a deed of trust in the Ordway house.
Under the Act, an individual’s eligibility for SSI is affected, and she may be temporarily
ineligible, if she disposes of resources for less than fair market value. 42 U.S.C.
§ 1382b(c); see POMS SI 01150.110.
Here, the NH’s quitclaim deed demonstrates that she did not sell the entire house.
Instead, she sold a percentage ownership of the house. The exact percentage is not
specified in the quitclaim deed, but instead will be calculated at the time the La
Junta home is sold, based on what percentage interest corresponds with $10,000. See Eastbrook Homes, Inc. v. Treasury Dep’t, 820 N.W.2d 242, 250 (Mich. Ct. App. 2012) (“A quitclaim deed is generally construed
as conveying all the grantor’s interest in the described property unless some interest
is expressly excepted or reserved.”), cited in 26A C.J.S. Deeds § 327. In other words,
the NH transferred whatever percentage of the property that is worth $10,000.
In return, the quitclaim deed indicates that the NH would receive $10,000. Although
the particulars of the consideration she received were not in writing at the time
she conveyed an interest in the La Junta home, the promissory note and deed of trust
were subsequently executed. The fact that these documents were executed after the
quitclaim deed is not problematic. See Jarnagin v. Busby, Inc., 867 P.2d 63, 66 (Colo. Ct. App. 1993) (“[A] contract that contains essential terms
may constitute a valid binding contract, even though the parties agree to negotiate
on additional terms.”).
These documents show that, while the NH did not receive cash for her transfer of an
interest in the La Junta home, she received a promise of $10,000 in the future. A
promise of future performance is consideration “if, but only if, the promised performance
would be consideration.” Restatement (Second) of Contracts § 75. Here, the promised
performance (payment of the $10,000) is plainly consideration. Further, the promise
is secured by an interest in the Ordway house. Because the NH received a secured and
enforceable promise to pay the $10,000, we believe that the NH received fair market
value for her interest in the La Junta home.
Although the NH did not transfer a resource for less than fair market value, it should
be noted that she continues to have property interests that might be countable resources.
First, she continues to own a percentage interest in the La Junta house. Whether or
not her percentage interest is countable may depend on whether she can convert her
percentage interest to cash, in light of the joint ownership. See POMS SI 01120.010(C)(2) (property not a resource if litigation would be required to accomplish sale
of joint property). Second, she owns the promissory note, which appears countable.
See POMS SI 01140.300(C)(1), (D)(3) (noting that a promissory note is a resource, but giving the claimant
the right to submit evidence showing that there is a legal bar to sale of the agreement).
The promissory note and deed of trust provided by CCDC adequately demonstrate that
the NH did not sell the La Junta house for less than fair market value. However, the
NH continues to have property interests that might be countable resources and should
be further evaluated.