TN 1 (05-15)
PS 01830.084 People’s Republic of China
A. PS 15-112 Exclusion of Chinese Real Property from Countable Resources Under Loss of Housing for Joint Owner Exception
DATE: April 15, 2015
This RCC opinion examines whether the co-owned Chinese real property constitutes a resource for supplemental security income (SSI) eligibility purposes. Based on the documents submitted to the agency, the SSI recipient co-owns a house with her spouse in China, and forcing a sale of the residence would present an undue hardship, because he has nowhere else to reside. Because the SSI recipient co-owns the real property in China, and because the sale of the real property would cause undue hardship to her spouse, due to loss of housing, the real property should be excluded as a resource.
Whether the Chinese real property of J~ should be a countable resource for Supplemental Security Income eligibility purposes.
No. Because J~’s Husband, S~, co-owns the real property in China and because the sale of the real property would cause undue hardship to S~ due to loss of housing, the real property should be excluded as a resource.
SUMMARY OF FACTS
Claimant J~ was receiving Supplemental Security Income (SSI) benefits in March 2012 when a redetermination was performed. At issue in the redetermination was real property that J~ owns in China. In April 2012, the Social Security Administration (SSA) requested that J~ provide a statement from her Husband regarding the real property as well as a deed and the value of the real property (Ex. 6, p. 30) . J~ submitted an appraisal of the real property. The appraisal has been translated into English (the Appraisal). The Appraisal notes that, while the client for the Appraisal is S~, the owner as recorded on the Certificate of Real Estate is J~ (Appraisal, p.13). The Certificate of Real Estate shows that the real property was purchased in November 1992 from Hejigong Pharmaceutical (Appraisal, p. 27-28).
On July 24, 2012, an SSA field office informed J~ that she had resources exceeding the maximum limit (Ex. 2, p. 1) because of ownership of the real property in China. On September 6, 2012, J~ requested a hearing by an administrative law judge, asserting the real property was exempt from resources (Ex. 7, p. 1).
The ALJ found that the SSA field office properly determined that J~ was not eligible for SSI because of excessive resources. J~ requested review of the ALJ’s decision on July 10, 2013 (Form HA-520). She submitted a copy of her wedding certificate, dated May 11, 1982, evidencing the marriage between her and her Husband ten years before the real property was purchased. J~ also submitted a Form 795 statement, dated July 10, 2013, from her Husband. In the statement, S~ certifies (i) that he and J~ have been married since May 11, 1982 and remain married; (ii) that they purchased the real property together after they were married with communal savings; (iii) that he is currently retired, cannot afford to move out of the home because of weak financial ability, and that the real property is the only place he can stay; and (iv) that pursuant to Chinese law, he is the co-owner of the property and any sale of the real property requires his acknowledgment and approval.
APPLICABLE LAW AND PROGRAMMATIC GUIDANCE
POMS SI 01130.100 B identifies situations under which certain real property may be excluded as a resource. Generally, an individual’s primary residence is excluded as a resource. However, when real property ceases to be the principal place of residence, it is included in determining countable resources unless excluded under another provision. POMS SI 01130.100 B.5 provides that real property may continue as an excluded resource, even when it no longer serves as a claimant’s principal place of residence, when “its sale would cause undue hardship, due to loss of housing for a co-owner of the property.”
The POMS provision is consistent with the regulations, which provide:
Excess real property which would be a resource under § 416.1201 is not a countable resource for conditional benefit purposes when: it is jointly owned; and sale of the property by an individual would cause the other owner undue hardship due to loss of housing. Undue hardship would result when the property serves as the principal place of residence for one (or more) of the other owners, sale of the property would result in loss of that residence, and no other housing would be readily available for the displaced other owner (e.g., the other owner does not own another house that is legally available for occupancy). However, if undue hardship ceases to exist, its value will be included in countable resources as described in § 416.1207.
20 C.F.R. § 416.1245(a).
S~ Has a Co-Ownership Interest in the Real Property.
Whether S~ has a co-ownership interest in J~’s real property is governed by the People’s Republic of China Marriage Law (2001). The Marriage Law has been interpreted thrice by the Supreme People’s Court (SPC) in 2001, 2003, and 2011. The SPC Interpretations provide detailed explanation of the application of the marital property rules provided by the Marriage Law. English translations of the judicial interpretations are not readily available.
The Marriage Law establishes a community property regime with certain exceptions (Art. 17-18). The Marriage Law applies to a married couple’s property unless the couple otherwise reaches an explicit agreement (Art. 19).
Pursuant to the Marriage Law and the SPC Interpretations, community funds obtained by either spouse during the marriage, including wages, are considered jointly owned property (Art. 17; see also Zhang email). Property purchased with community funds likewise is community property unless it falls into an exception or is subject to other agreement of the parties.
Here, J~ and S~ agree that the real property was purchased with community funds during the marriage and constitutes real property. It does not appear that any exceptions to the general rule would apply in this case. Accordingly, J~’s real property is community property subject to the co-ownership interest of S~.
Sale of the Real Property Would Cause Undue Hardship Due to Loss of Housing.
In order for the real property to be excluded from resource counting, its sale would have to result in undue hardship to J~’s co-owning Husband, S~. Pursuant to 20 C.F.R. 1245(a), undue hardship to a co-owner from the sale of real estate results when (i) the property serves as the principal place of residence for the co-owner, (ii) sale of the property would result in loss of that residence, and (iii) no other housing would be readily available (e.g., the co-owner does not own another house that is legally available for occupancy).
Here, J~ has provided evidence satisfying requirements (i) and (iii) above: she has provided a certification from S~ that he is currently retired, cannot afford to move out of the home because of weak financial ability, and that the real property is the only place he can stay.
J~’s sale of the real property would also result in satisfaction of requirement (ii) above. Chinese property is generally owned in joint ownership rather than by proportion, and both parties have equal rights in the disposal of the property (Art. 17; see also Zhang email). Accordingly, J~ may not sell her ownership interest in the real property independent of her Husband’s ownership interest. Thus, their joint sale of the real property would result in loss of S~’s principal residence, and no other housing is readily available to S~.
It is our opinion that J~’s Chinese real property should be excluded as a resource because her Husband co-owns the real property in China and because the sale of the real property would cause undue hardship to her Husband due to loss of housing.
B. PS 15-072 SSI Resource Issue: Foreign Property
DATE: January 22, 2015
This RCC examines whether ownership of Chinese real property constitutes a resource for supplemental security income (SSI) eligibility purposes, where the individual claims that such property is not freely transferable. Individuals cannot privately own land in China, but may obtain transferrable land-use rights. The individual submitted a certificate to SSA that lists him as the sole owner of a house in China and lists the State as the owner of the land, and also indicates that the land-use right has been assigned. Chinese law permits individuals to privately own residential houses and apartments built on state-owned land. Based on the documents he submitted to the agency, the individual owns a house and has been assigned a renewable land-use right to the underlying land. Because his property interest is freely transferable and may be converted to cash, it constitutes a resource for purposes of SSI.
You asked whether X~’s ownership of Chinese real property constitutes a resource for supplemental security income (SSI) eligibility purposes, where X~ claims that such property is not freely transferable.
Yes. X~ is able to sell or otherwise transfer his ownership interest in Chinese real property. Accordingly, that property constitutes a resource for purposes of SSI eligibility.
On January 12, 2012, X~ and Y~ applied for SSI as a married couple. X~ and Y~ were both born in China, but currently reside in California and are naturalized United States Citizens. On July 10, 2012, the agency denied X~ and Y~’s application for SSI, finding that their total resources exceeded the statutory Limit. Specifically, X~ admitted that his father transferred ownership of a house to him in 1985. X~ stated that the house’s value was approximately $16,000. X~ and Y~ testified that they do not intend to return to China to live in the house.
On September 5, 2012, X~ requested reconsideration. On October 31, 2012, X~ submitted additional information. Specifically, in an October 31, 2012 statement, X~ claimed that his eight siblings were co-owners of the house his father transferred to him in 1985. He identified the address of the house as ~~ ~~~, Nansha Residential Committee, Jun’An Town, Shunde District, Foshan City, China. Additionally, X~ submitted September 5, 2012 statements from his mother and sister. X~’s mother, then 95 years old and Living in the house, asserted that all nine of her children are co-owners of the property located at ~~~ ~~~. Likewise, X~’s sister represented that she has an ownership and residential right in the property.
X~ also provided a certificate issued by the Nansha Community Residential Committee, dated November 16, 2011. According to the certificate, X~ was the original resident of the house located at ~~~ ~~~ . The certificate also stated that X~’s parents and siblings have lived in the house permanently, and X~ is prohibited from selling this house to others. On November 26, 2012, the agency denied X~’s request for reconsideration and he requested a hearing on January 8, 2013. The ALJ held a hearing on February 21, 2014. An attorney represented the couple at the administrative hearing and X~ testified on his own behalf.
On August 27, 2014, in response to your request, X~ submitted a Property Rights Certificate with a registration date of January 17, 2006, showing that he owns property at ~~~ ~~, Nansha Residential Committee, Jun’An Town, Shunde District, Foshan City, China. X~ made no prior mention to this official property record, nor did he explain his failure to produce this record prior to the agency’s request. The certificate lists X~ as the sole owner of the house. The certificate lists the State as the owner of the land, and indicates that the land-use right has been assigned.
To be eligible for SSI payments, claimants must prove they are at least 65 years of age, or blind, or disabled with limited income and limited resources and legally residing in one of the 50 states, the District of Columbia, or the Northern Mariana Islands. See Social Security Act §§ 1602, 1611; 20 C.F.R. § 416.202.
A resource, for SSI purposes, includes assets that an individual owns and could convert to cash and use for food or shelter, including real property. See Social Security Act § 1613; 20 C.F.R § 416.1201(a). If the individual has the right or power to liquidate the property or his share of the property, it is a resource. See 20 C.F.R. § 416.1201(a)(1). If an individual disposes of his or her resource for less than fair market value, he or she becomes ineligible for SSI benefits for 36 months. See Social Security Act § 1613(c)(1)(A); Program Operations Manual System (POMS) SI 01150.001.C.3; SI 01150.003. The limit for countable resources is $2,000 for an individual and $3,000 for a couple. See Social Security Act § 1611(a)(3); 20 C.F.R. § 416.1205; POMS SI 01110.003.A.2.
Although the agency considers real property a resource, an individual’s principle place of residence, regardless of value, is an excluded resource (the home exclusion). See Social Security Act § 1613(a)(1); 20 C.F.R. §§ 416.1210(a), 416.1212; POMS SI 01130.100. Property ceases to be the principle place of residence as of the date that the individual left it with no intention of returning. See 20 C.F.R. § 416.1212(c); POMS SI 01130.100.B.
Similar to the home exclusion exception, the agency also excludes the value of an individual’s ownership interest in jointly owned real property if the sale of the property would cause undue hardship, due to loss of housing, to a co-owner (the undue hardship exception). See Social Security Act § 1613(b)(2)(A); POMS SI 01130.130.
The People’s Republic of China The People’s Republic of China (PRC or China) provides for the protection of private property in its 1982 Constitution and 2004 amendments. See Zhang, Laney, China: Real Property Law, the Law library of Congress, Global Legal Research Center (October 2014), 1-2. Article 13 of the PRC Constitution provides that “[c]itizens’ lawful private property is inviolable.” Id. at 1.
The PRC Property Rights Law, which became effective on October 1, 2007, addresses the establishment, alteration, transfer, and elimination of property-related ownership rights, and the registration and delivery of movable and real property rights. Id. at 2.
According to the PRC Constitution and Property Rights Law, individuals cannot privately own land and natural resources in China. Id. at 3. Instead, the state owns urban land and collectives own rural and suburban land. Id. However, individuals can obtain a right to use land. The land-use right allows the right-holder to legally possess, use, and benefit from property owned by another (whether the state or a collective). Id.
In urban areas, the state grants or allocates land-use rights to land users. Id. For granted land-use rights, land users pay the state granting fees for a certain number of years. Id. Currently, land may be used for residential purposes for up to seventy years. Id. at 4. When the term for the right to use land for residential purposes expires, the term automatically renews. Id. If the land owner dies prior to the expiration of the seventy year or renewal term, the land-use right passes to the owner’s heirs. China’s Assignment Regulations provide that land users may transfer their land-use rights to others through sale, exchange, gift, mortgage, or lease. Id. at 4. When transferred, the land-use right and the right to structures on top of the land (home ownership) transfer simultaneously. Id.
In transferring real estate rights, the new owner obtains the land-use rights only for the period equivalent to the original assigned term minus the number of years the original owner has used the land. Id. at 5. However, as discussed above, a residential land-use right term will automatically renew upon expiration. Id.
According to the 2006 Property Rights Certificate, X~ owns a house located at ~~~ ~~in Foshan City, China, identified as an urban area. Although X~ does not own the land upon which the house is situated, it appears that the State has assigned him land-use rights, which renew automatically every 70 years. Per the PRC Constitution and Property Rights Law, X~ may sell or otherwise legally transfer these property rights. Thus, because X~ has an ownership interest in real property, which he could sell or otherwise convert into cash, that property is a countable resource. See 20 C.F.R. § 416.1201(a); POMS SI 01110.100.B.1.
Furthermore, the property does not qualify as an excluded resource under the home exclusion rule because the house is not currently X~’s principle place of residence nor does he intend on returning to it.
Although X~, his family, and the Nansha Community Residential Committee claim that, per cultural tradition, X~’s siblings and parents are co-owners of the property, they fail to provide any legal documents to confirm this claim. Moreover, the Property Rights Law provides that land-use rights must be registered with local government land authorities at or above the county level; these authorities issue certificates to affirm these rights. See Zhang, Laney, China: Real Property Law, at 5. Thus, the Property Rights Certificate, identifying X~ as the sole owner, appears to be dispositive.
Despite their allegations to the contrary, the agency has not received evidence showing that X~’s family members have any registered legal interest in the property, and Chinese law does not recognize family ownership arising from cultural traditions of an “ancestral home.” Moreover, X~’s failure to produce the property rights certificate prior to August 2014 suggests that his prior allegations of co-ownership may have merely been an attempt for X~ to evade the implications of sole ownership. Therefore, because the 2006 Property Rights Certificate lists X~ as sole owner of the property, the property’s sale cannot cause any undue hardship on co-owners, and the undue hardship exception does not apply.
Individuals cannot privately own land in China but may obtain transferable land-use rights. In addition, Chinese law permits individuals to privately own residential houses and apartments built on state-owned land. Based on the documents he submitted to the agency, X~ owns a house and has been assigned a renewable land-use right to the underlying land. Because X~’s property interest is freely transferable and may be converted to cash, it constitutes a resource for purposes of SSI.
“Ex.” Refers to exhibits in the administrative record by and before the Administrative Law Judge.
For example, the Third SPC Interpretation provides that even where a mortgage for real property is paid over the course of a marriage, if the down payment was made with one party’s separate property and the deed identifies only that party as the owner, a court in a divorce proceeding may distribute the real property to the down payment payer and require such person to make compensation to the other party with regards to mortgage payments made during the course of the marriage. Yu Di, Marriage Is Between a Man and a Woman and …: Latest Evolution of Marital Residence Regime in Contemporary China, 88 Chi.-Kent L. Rev. 1013, 1032 (2013).
If J~ could sell her ownership interest independent of her Husband’s interest, the sale of the real property would not satisfy prong (ii). See, e.g., Heid v. Astrue, No. CV 111-171, 2012 WL 5874318, at *5 (S.D. Ga. Oct. 26, 2012) report and recommendation adopted, No. CV 111-171, 2012 WL 5874338 (S.D. Ga. Nov. 20, 2012), in which the district court affirmed the Appeals Council’s determination that the sale of Georgia real property co-owned by spouses would not cause undue hardship because “in Georgia, Husband and wife are treated as tenants in common with regard to co-owned property, and S~ [the claimant’s spouse] would have retained his ownership interest and right to live on the property even if [the claimant] had sold her share.”
At the February 21, 2014 hearing, X~ explained that the Nansha Community Residential Committee is a group of individuals selected by farmers to take care of the village. He acknowledged that the Committee does not have an ownership right to the property.
X~ claims that he is prohibited from selling the property because it is his “ancestral” home and doing so would break with tradition. He claims that ancestral homes must stay within the family and remain in the name of the eldest son. We have no information to confirm or deny that this is a true cultural tradition. You have asked us not to consider this cultural claim.
X~ claims that, although the street address identified in the property rights certificate varies from the address identified in the Nansha Community Residential Committee’s November 16, 2011 statement, both documents refer to the same property. According to X~, the community changed street names after the property rights certificate was issued in January 2006. We have no information to confirm or deny this alleged change.
Laney Zhang, a Senior Foreign Law Specialist at the library of Congress, provided a report entitled China: Real Property Law, in response to OGC’s request. We relied on the information in this report in summarizing and analyzing Chinese property law.
We obtained this information in a follow-up phone call with Laney Zhang on October 15, 2014.
Should X~ die prior to the expiration of the 70-year land-use assignment, that land-use right does not terminate; rather, it transfers to X~’s heirs. Thus, the land-use right is distinct from a life estate, which typically is not countable as a resource because the owner cannot sell the life estate or transfer it upon his or her death. See POMS SI 01110.515.B; SI 01140.110.A.6 (“The owner of a life estate can sell the life estate but does not have title to the property and thus normally cannot sell it or pass it on as an inheritance.”).
In the event that X~ transfers his property right interest for less than fair market value, he would be ineligible for SSI for up to 36 months. See Social Security Act § 1613 (c)(1)(A); POMS SI 01150.001.C.3; 01150.003.
X~’s family members do not explain why their testimony should outweigh Chinese Law and the 2006 Property Rights Certificate. They also fail to explain why they waited until 2014 to submit the 2006 Property Rights Certificate to the Agency.