PS 01820.017 Indiana

A. PS 03-170 SSI-Indiana Review of Transfer of Resources by Sharon K~ Refer to: S2D5G6; Our Reference: 03PO59

DATE: July 31, 2003

1. SYLLABUS

In this case, an SSI recipient had ownership interest in two homes for the period January 2002 through June 2002. Home A was excluded from resources as her principal place of residence, but when she obtained ownership interest in Home B in January 2002, it was countable as a resource which made her ineligible for SSI. In June 2003, she quitclaimed Home A to her mother for $1 and moved to Home B in July 2002. It was determined that quitclaiming Home A was a transfer of a resource for less than fair market value, and that she is subject to the 36-month period of ineligibility for SSI because the transfer did not meet any of the exceptions to the transfer penalty provided in the law.

2. OPINION

You asked us whether a transfer of a resource at less than fair market value should be charged to the claimant, Sharon K~, for purposes of Supplemental Security Income (“SSI”). You have also asked us to consider the implications resulting from the claimant's ownership of a townhome, which was not her primary residence.

FACTS

In July 1986, Ms. K~ mother, Elizabeth H~, purchased a home located on Ridgelawn Street (Property A) in Crown Point, Indiana. In October 1986, Ms. H~ executed a deed on Property A, naming Ms. K~ and herself as joint tenants with right of survivorship. Ms. K~ and her children moved into this home in October 1986, using it as their primary residence, and paying Ms. H~ $275 in rent each month. Ms. H~ has never lived on the property.

In October 2000, Ms. K~ applied for SSI; her application was denied due to her resources exceeding the maximum level for eligibility.

In September 2001, Ms. K~ decided to put Property A on the market, reportedly because her children had grown and left home and she was having difficulty maintaining the property. She and her mother listed the property for $110,000.

Ms. K~ reapplied for SSI in November 2001 and her application was granted. Property A remained unsold at this time, with real estate market conditions worsening after the September 11th attacks. However, Ms. K~ began to search for a new home, and in January 2002, her mother purchased a newly constructed townhome for her on Aspen Court (Property B) in Crown Point, Indiana, at the purchase price of $132,000.1 Both Ms. K~ name and her mother's name appeared on the title to Property B, although, according to her attorney, Ms. K~ initially had reservations about the implications that this would have on her eligibility for SSI, Medicaid, and other sources of government aid.

Ms. K~ continued to live in Property A. In June 2002, a third party contracted to purchase the home for $105,000. On June 13, 2002, prior to the closing on Property A, Ms. K~, having learned that there would be $60,000 in proceeds from the sale, and that she would be entitled to $30,000 of it (given her 50% interest in Property A as a joint tenant), executed a quitclaim deed that placed legal title slely in her mother's name. According to the deed, Ms. K~ quitclaimed Property A to Ms. H~ “"in consideration of One Dollar ($1.00) and other valuable consideration.” Ms. K~ attorney explains that the claimant quitclaimed the property because she did not feel she was entitled to any profit, since she did not contribute any money towards the original purchase of the home in 1986. Based upon tax assessment records, the fair market value of Property A was calculated as $144,300 as of the sale date.

Ms. K~ moved out of Property A and into Property B (as her primary residence) in July 2002. Her mother did not move into and has never resided in that new property. In September 2002, the Agency issued a Notice of Planned Action, stopping Ms. K~ SSI payments due to her transfer of her interest in Property A for less than fair market value. The notice indicated that Ms. K~ was ineligible for SSI between July 2002 and July 2005. Ms. K~ filed a request for reconsideration. Ms. K~ was also charged with an overpayment between November 2001 and July 2002, given her co-ownership of two properties (one of which was not her home) at the same time, and the fact that the total value of Property B exceeded the resource limit. She subsequently requested waiver of the overpayment on grounds of undue hardship.

DISCUSSION

For these reasons, we conclude that, absent a finding of undue hardship, the claimant's June 2003 transfer of her interest in her home on Ridgelawn Street to her mother, for less than fair market value, should be charged to the claimant as a transfer of resources, for purposes of determining her eligibility for SSI. We also conclude that the claimant's ownership of two properties, one of which was not her principal residence, gave rise to an overpayment, and that, absent grounds for waiver, overpayment should be charged to Ms. K~.

A. Ms. K~ transferred ownership of a resource for less than fair market value.

As of December 14, 1999, transferring ownership of a resource for less than fair market value (FMV) can result in a period of ineligibility for SSI (for a period of up to 36 months). 42 U.S.C. § 1382b(c)(1)(A)(i); POMS SI 01150.001A. The number of months the person is ineligible depends on the dollar value of the resource that was sold or given away. In the case of a resource held by an individual in common with another person or persons in joint tenancy, tenancy in common, or similar arrangement, the resource or the affected portion of such resource “shall be considered to be disposed of by the individual when any action is taken, either by the individual or by any other person, that reduces or eliminates the individual's ownership or control of such resource.” 42 U.S.C. § 1382b(c)(1)(D). FMV is defined as “the current market value (CMV) of a resource at the time the resource is transferred. The CMV of a resource is the going price for which it can be reasonably expected to sell on the open market in the geographic area involved. ” POMS SI 01150.005.B.1.

Ms. K~ held Property A in joint tenancy with her mother, and she transferred all of her interest in the property by executing the quitclaim deed in June 2002, naming her mother as the sole titleholder. See West. Annot. Ind. Code § 32-1-2-9 (Quitclaim deed “transfers all the estate which the grantor could convey" by any other deed). The quitclaim deed shows consideration for the transfer, stating that the deed was executed in return for”One Dollar ($1.00) and other valuable consideration." It does not appear that Ms. K~ received any other consideration. As such, Ms. K~ transferred a resource (her half of Property A) for less than FMV.

B. Exceptions other than undue hardship do not apply.

There are exceptions to the general rule concerning transfers of resources for less than FMV. The period of ineligibility for transfer of a home for less than FMV, for example, will not apply if the individual transfers title to: his or her spouse; a child under age 21; a child of any age who is blind or disabled; a child who was residing in the transferor's home for at least two years immediately before the date the individual becomes institutionalized; a child who provided care to the individual, thereby permitting the individual to reside at home rather than in an institution; or to a sibling who has ownership interest (including life estate and equitable ownership) in the home and was residing in the home for at least one year immediately prior to the date the individual was institutionalized. POMS SI 01150.122.A.1, A.2, and A3. As Ms. K~ transferred her interest in her home to her mother, and not to any individuals described above, these exceptions for transfer of a home do not apply.

Additionally, the transfer of a resource under FMV, exclusively for a purpose other than to qualify for SSI benefits, may qualify as an exception. POMS SI 01150.125.A. There is a rebuttable presumption, when an individual gives away or sells resources for less than FMV, that the resources were transferred for the purpose of establishing or maintaining SSI. POMS SI 01150.125B. Such a presumption is rebutted only if the individual presents convincing evidence that the resources were transferred exclusively for a purpose other than to become or remain eligible for SSI, and, if the individual has some other purpose for transferring the resource, but an expectation of establishing or maintaining SSI was also a factor, the period of ineligibility would still apply. POMS SI 01150.125.B.

Here, it does not appear that Ms. K~ has rebutted the presumption with convincing evidence that she transferred her interest in Property A to her mother for under FMV exclusively for a purpose other than to become and remain eligible for SSI. Indeed, in February 2002, four months prior to the sale of Property A (and while Property A was still on the market), Ms. K~ expressed concern over adding her name to the title on Property B, specifically with regard to maintaining her SSI eligibility. See Attachment to Request for Waiver of Overpayment, Section I. She therefore was aware of the potential impact that owning excess resources could have on her SSI eligibility. Moreover, the timing of the quitclaim transaction, just prior to the closing on Property A, also implies an intention to maintain eligibility.

Although Ms. K~ now claims that she intended, by making this transfer, to “repay” her mother for the shelter expenses she received from her mother when living in Property A, this argument is undercut by the fact that she had been paying monthly rent to her mother during the entire period of her residence in Property A and therefore, had likely already covered her shelter expenses. In any event, even if this was a reason behind the quitclaim transfer, as explained above, the evidence nonetheless suggests that this was not the exclusive reason for doing so, and that she also expected to maintain her SSI eligibility by quitclaiming Property A.

Still another exception may apply when all resources transferred for less than FMV have been returned to the individual who transferred them, in the same month. POMS SI 01150.124A . Such cases are treated as if the transfer had never occurred. Ms. K~ argues that by adding her name to the title on Property B, she “effectively retrieved the asset which the Social Security Administration believes she transferred-her one half interest in the home at 547 Ridgelawn. ” See Request for Waiver of Overpayment Recovery, Attachment, at II. Her transaction does not fall within the exception, however, since she did not reacquire any interest in Property A; she instead acquired legal title in Property B.

It does not appear that Ms. K~ intended, through execution of the quitclaim deed, for her mother to hold the ½ interest in constructive trust, as repayment for the purchase of Property B. Even if such an equitable agreement did exist (and no evidence suggests this), it is unlikely that an unwritten agreement for the purchase of real property would be enforceable.

When it has been determined that no other exceptions apply, the final exception, that of undue hardship, should be considered. POMS SI 01150.126.A. Undue hardship exists if the individual alleges that failure to receive SSI payments would deprive her of food or shelter (i.e., subject to eviction from current residence and no other affordable housing available) and that her total available funds (income and liquid resources) do not equal or exceed the full Federal Benefit Rate (FBR) plus applicable federally administered state supplement. POMS SI 01150.126.B. We recommend additional development to determine whether the undue hardship exception applies.

C. Ms. K~ is liable for overpayment during the period in which she simultaneously owned Properties A and B, unless grounds for waiver of the overpayment are established.

As a result of owning Properties A and B during the period from February 2002 to June 2002,2 ] Ms. K~ owned excess resources, since the equity value in Property B (non-home) exceeded the resource limit. Property A, her home, would be excluded as a resource. She should be charged with an overpayment, unless grounds for waiver of the overpayment (claimant was without fault in causing overpayment, and recovery of overpayment would be against equity or good conscience) are found. See POMS SI 02260.001.1. Accordingly, we recommend further development to determine the applicability of waiver provisions.

CONCLUSION

For these reasons, we conclude that, absent a finding of undue hardship, the claimant's June 2003 transfer of her interest in her home on Ridgelawn Street to her mother, for less than fair market value, should be charged to the claimant as a transfer of resources, for purposes of determining her eligibility for SSI. We also conclude that the claimant's ownership of two properties, one of which was not her principal residence, gave rise to an overpayment, and that, absent grounds for waiver, overpayment should be charged to Ms. K~.

Sincerely,Kim Leslie B~
Kim Leslie B~Regional Chief Counsel, Region V
Social Security Administration

By: Jessie A. W~-G~

Assistant Regional Counsel

B. PS 00-498 Non-Home Real Property Transfer for David M~

DATE: June 19, 2000

1. SYLLABUS

Does a valid deed exist even though it has not been recorded? In general, deeds must be recorded in order to provide notice to the public and to potential purchasers of the ownership of land. However, when a deed is executed and delivered, but not recorded, it may still be effective as against the grantor. Indiana law provides that an unrecorded deed is effectual against the grantor and persons having notice of the transfer. Therefore, in this case, the transfer of the property from the SSI recipient to his grandchildren was a valid transfer even though the deed was never recorded.

2. OPINION

You asked whether a quitclaim deed, executed by David M~, an SSI claimant, validly transferred Mr. M~'s interest in property even though the deed was never recorded. For the reasons set out below, we believe that the deed transferred Mr. M~'s interest in the property even though it was not recorded. We recommend, however, that the local office investigate whether Mrs. M~ had any interest in the land and whether Mr. M~ received any consideration in return for executing the quitclaim deed.

Background

David and Savelia M~ are an SSI aged couple. They were determined to have excess resources based on their ownership interest in 10 acres of undeveloped land. On March 2, 1998, however, David M~ completed a quitclaim deed in which he transferred his ownership interest in the land to four people, who are described as his grandchildren. The note from the district office states that the deed was never filed or recorded.

Discussion

1. Role of filing and recording-Mr. M~ transferred his interest in the property to his grandchildren.

In general deeds must be recorded in order to provide notice to the public and to potential purchasers of the ownership of land. See Roger B~, Real Property in a Nutshell (3d e. 1993). However, when a deed is executed and delivered, but is not recorded , it may still be effective as against the grantor. Thus, Indiana law provides that an unrecorded deed is effectual against the grantor and persons having notice of the transfer. See Wests Annot. Ind. Code § 32-1-2-11. The unrecorded quitclaim deed might in certain circumstances allow a third-party to obtain the property, but is binding between the grantor and the grantees. Mr. M~ would be found to have validly transferred his property to his grandchildren.

2. What property did Mr. M~ transfer?

Mr. M~ executed a quitclaim deed. Under Indiana law, a quitclaim deed transfers “all the estate which the grantor could convey ”by any other deed. West Annot. Ind. Code § 32-1-2-9. Here, therefore, Mr. M~ transferred all interest he had in the property described in the deed.

3. Did Mrs. M~ have any interest in the land?

The note from the district office states that Mr. and Mrs. M~ were an aged couple entitled to SSI. The quitclaim deed was executed by Mr. M~, not by Mrs. M~. We recommend that the field office investigate how the land was owned prior to Mr. M~'s execution of the quitclaim deed in order to determine whether Mrs. M~ had any ownership interest in the property. If she were a co-owner, and if she has not transferred her interest, she might remain an owner of the property or of part of the property.

4. What, if anything, did they get for the transfer?

The quitclaim deed uses traditional legal language showing consideration for the transfer. It states that the deed was executed in return “for the sum of ONE DOLLAR ($1.00), and other valuable consideration.”The recited consideration need not be the only consideration provided for the transfer. Therefore, we recommend that the field office investigate whether Mr. M~ received any consideration for the land. If he did, that consideration would presumably be a resource.

Conclusion

For these reasons, we believe that the March 2, 1998, quitclaim deed was legally sufficient to transfer to his grandchildren all of Mr. M~'s ownership interest in the property. We recommend, however, that the field office investigate whether Mrs. M~ had any interest in the property and also whether Mr. M~ received any additional consideration for the transfer. Assuming that Mrs. M~ did not have an ownership interest and that Mr. M~ did not receive other consideration, the property would have ceased to be a resource on March 2, 1998.


Footnotes:

[1]

A statement from Ms. H~ dated October 29, 2002, states that she had been making mortgage payments on Property B since January 1, 2002.

[2]

The CR's notes state that Ms. K~ gained title to Property B in February 2001, and accordingly, the original decision found Ms. K~ liable for overpayment from November 2001 (the month in which SSI eligibility started) to July 2002. Plaintiff's attorney's letter, however, states that the property was not acquired until February 2002 (see Attachment to Request for Waiver of Overpayment). Accurate determination of the applicable dates should be made so that the overpayment period can be calculated.


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PS 01820.017 - Indiana - 11/20/2003
Batch run: 01/27/2009
Rev:11/20/2003