TN 2 (05-15)
PS 01830.290 Philippines
A. PS 15-124 Treatment of Property for SSI Purposes – J~
DATE: May 8, 2015
This RRC opinion examines whether an SSI recipient has an ownership interest in foreign non-home real property that was owned solely by her deceased husband, and whether the property is a resource to her. Under Philippines law, the SSI recipient has an ownership interest in foreign non-home real property through either intestate succession, or a marital property regime. The current market value of her ownership interest in the property is countable as a resource to the SSI recipient. She has the legal right to convert her ownership interest into cash and use the property for her support and maintenance.
You asked us to review whether an SSI recipient has an ownership interest in foreign non-home real property that was owned solely by her deceased husband, and whether the property is a resource to her.
Under Philippines law, J~ (J~) has an ownership interest in foreign non-home real property through either intestate succession, or a marital property regime. The current market value of her ownership interest in the property is countable as a resource to J~. She has the legal right to convert her ownership interest into cash and use the property for her support and maintenance. Further development of facts is necessary to determine the value of her ownership interest. J~ may have been a co-owner of the property if it was purchased during the marriage. Alternately, if the property was solely owned by her deceased husband during his lifetime, a share of the property passed to J~ via intestate succession at the time of her husband’s death. In that case, the value of J~’s ownership interest in the property depends upon the status of her children, and any other descendants of her deceased husband.
According to the information you provided, J~ married R~ in 1954 and lived with him in a home in Manila, Philippines. See 2/4/13 Letter. The documents indicate that J~ and R~ had at least two children. See 5/20/14 Statement of Claimant; 2/27/14 Letter. They lived in their home in Manila for 40 years before moving to the United States. See 5/20/14 Statement of Claimant. In October 2002, R~ died intestate. Id. J~ was receiving SSI benefits, but during a recent redetermination, she stated that she had property in the Philippines. See Memorandum. J~ claimed that she had no ownership interest in the property because it was in her deceased husband’s name, he did not have a will, and he did not transfer the property to her. See Memorandum.
J~ submitted letters written on her behalf that state that she has no ownership interest in the property. See 2/4/13 Letter; 2/27/14 Letter. She also submitted property tax documents which list R~ as the sole owner of the property. See Notice of Assessment of Real Property; 4/2/14 Tax Declaration of Real Property. The documents indicate that in 1995 the property was valued at 20,830 pesos (approximately $464.34), and in April 2014 the property was valued at 176,700 pesos (approximately $3,938.97). See id. Additionally, one of the letters states that J~ considers the property abandoned, and the children have no interest in the property. See 2/27/14 Letter.
However, J~ admits that she is allowing her daughter-in-law and other relatives to live in the property temporarily, although they are not paying rent. See 5/20/14 Statement of Claimant. In addition, J~ executed a Special Power of Attorney document in December 2012 which granted a third party the authority to “represent matters regarding house property . . . owned and named by my husband R~.” See Special Power of Attorney. Further, a field examiner traveled to the property in October 2014 and determined that it was still owned by J~ and R~. See 10/20/14 Report of Contact.
Pursuant to POMS SI 01140.100, “non-home real property” consists of land and buildings or immovable objects (including some mobile homes) that are attached permanently to the land and which do not meet the definition of a home (property that a person owns and uses as a principal place of residence). See POMS SI 01130.100(A)(1). When a claimant has an ownership interest in non-home real property, its current market value is countable as a resource. Id. at 01130.100(B); see POMS SI 01120.010(B)(1).
Despite having an ownership interest, property cannot be considered a resource if the owner lacks the legal ability to convert non-cash property into cash. POMS SI 01120.010(B)(2). Conversely, if there is a legal restriction against the property’s use for the owner’s own support and maintenance, the property is not considered her resource. Id. at 01120.010(B)(3).
Evidence of the ownership and current market value of foreign property can be obtained through the claimant, or through assistance by the Office of International Operations. See POMS SI 01140.100(F)(2).
J~’s Ownership Interest in the Property
J~ claims that she has never had an ownership interest in the property. She states that the property was solely owned by her husband R~, and it did not transfer to her upon his death. However, under Philippines law, an ownership interest in the property passed to J~ through intestate succession. Further, J~ may have held an ownership interest in the property even prior to R~’s death, if it was acquired during her marriage to R~.
Intestate Succession Under the Civil Code of the Philippines, property is transferred through intestate succession when a person dies without a will. At the moment of death, the property, rights, and obligations of the decedent are transmitted to his heirs. If the decedent is survived by his wife and legitimate children, the widow inherits the same share as each of the children, who always inherit equal shares. If the widow survives with illegitimate children, she is entitled to one-half of the inheritance, and the illegitimate children are entitled to the other half.
J~ was married to R~ at the time of his death. See 2/27/14 Letter; Statement of Claimant. The documents indicate that J~ had at least two children, however it is unconfirmed whether the children were from her marriage to R~. See id. It is also unclear from the documents whether or not R~ had additional children outside of his marriage to J~.
Thus, under Philippines law, J~ has an ownership interest in the property by virtue of intestate succession. Further development of facts regarding the status of her children, and any additional descendants of R~, is necessary in order to determine what share of the property she has inherited. (If J~ inherited only a partial share, the value of her share might not exceed the resource limit.)
Additionally, at the time that J~ and R~ were married in 1954, the Civil Code of the Philippines provided that spouses could elect a property regime of their choice (e.g., completely separate property, or another regime). In the absence of an agreement, the system of “conjugal partnership of gains” (CPG) governed the marital property. Under CPG, everything brought into the marriage as exclusive property remained separate, and everything acquired during the marriage is presumed to be co-owned by the parties.
CPG terminated upon the death of either spouse. After the spouse’s death, the property would be inventoried to determine how it should be liquidated under the CPG system. During the liquidation, the surviving spouse and children would be given support until their property was delivered.
The documents in the file do not indicate when the property was purchased, or what marital property regime the parties were under. If the property was acquired during J~ and R~’s marriage, J~ was potentially a co-owner of the property, and would be entitled to support during liquidation, as well as at least her half of the property upon R~’s death. As noted above, even if R~ purchased the property prior to the marriage, and he was the sole owner, a share of the property still passed to J~ upon his death through intestate succession. If J~ was a co-owner, however, the amount of her share upon R~’s death would be different.
Thus, further development of facts is needed to determine if the property was purchased during the marriage, and whether the marriage was governed by the CPG system such that J~ was a co-owner. In which case, J~ may be entitled to a greater share of the property than she would otherwise receive under intestate succession.
Under the Civil Code of the Philippines, a property owner may lose possession of his property by abandonment, but he cannot abandon his ownership rights to the land. Granting permission to allow others to possess the property does not constitute abandonment.
Here, a letter in the file indicates that J~ considers the property abandoned and the children have no interest in the property. See 2/27/14 Letter. However, J~ also stated that she is permitting her daughter-in-law and other relatives to live on the property, although they are not paying rent. See Statement of Claimant. In addition, an examiner from the Office of International Operations traveled to the property to conduct an investigation in October 2014, and confirmed that J~’s relatives were occupying the home. See 10/20/14 Report of Contact The examiner also obtained information indicating that “Mr. and Mrs. G~ is [sic] still the owner of the said property.” See 10/20/14 Report of Contact. Id. Additionally, a tax declaration from January 2014 still lists R~ as the owner of the property. See 4/2/14 Tax Declaration of Real Property.
Thus, the property is not considered abandoned under Philippines law, even though J~ is permitting others to possess it.
J~’s Ability to Use the Property for Her Own Support and Maintenance.
Even though J~ has an ownership interest in the property, it is not countable as a resource if she cannot convert the property into cash, or if there is a legal restriction against her use of the property for support and maintenance. See POMS SI 01120.010(B)(2)-(3).
Here, the examiner from the Office of International Operations determined that there was pending litigation regarding the rightful ownership of the entire area where the subject property is located. See 10/20/14 Report of Contact. However, he stated that despite the pending litigation, J~ “was not barred from selling the property or property rights to willing or prospective buyers.” Id.
Thus, although it is unclear what share of the property J~ owns, she has the right to convert her share into cash. There is litigation pending over the rightful ownership of the property, however, the Office of International Operations examiner indicated that there is no legal restriction barring J~’s use of the property for her support and maintenance.
J~ has an ownership interest in the property located in Manila, Philippines, and she has a right to convert the property to cash or use it for her own support and maintenance. Thus, the foreign non-home real property is countable as a resource to J~. Further development of facts is needed to determine the value of her ownership interest, which depends on whether she inherited her share through intestate succession, or through co-ownership of marital property.
The following specific questions will develop the necessary facts regarding J~’s potential co-ownership of the property:
Was the property purchased during J~ and R~’s marriage?
When J~ and R~ married, did they decide whether or not they would keep their property separate?
How many children did J~ and R~ have together?
Does J~ know whether or not R~ had any children outside of their marriage (and if so, how many)?
If J~ states that the property was purchased during their marriage, and they either did not choose how to separate property upon termination, or they chose to use the CPG system, please contact OGC for further guidance. However, if J~ confirms that the property was not purchased during the marriage, or she states that she and R~ agreed to keep the property separate, then J~’s share of the property can be determined as follows.
• If J~ had no children with R~, and R~ had no other children, J~ inherited the entire share of the property.
• If J~ had children with R~, and R~ had no other children, J~ and the children inherited equal shares. (For example, if the couple had two children, J~ inherited a 1/3 share of the property. If the couple had three children, J~ inherited a 1/4 share of the property.)
• If J~ had no children with R~, but R~ had other children, J~ inherited a 1/2 share of the property.
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.
See Currency Converter link, located in POMS SI 01140.100(F)(2); also available at: http://www.oanda.com/currency/converter/ (last visited March 26, 2015).
The following information was obtained from The Law Library of Congress via a request to research Philippines intestate succession and related issues.
The memorandum from the Law Library of Congress notes that intestate succession of Muslim Filipinos is governed by the Code of Muslim Personal Laws. However, the Muslim Code does not appear to be applicable, as the records do not indicate that J~ and R~ are Muslims.
The Law Library of Congress’s memorandum does not clarify whether a co-owner receives the entire property upon their spouse’s death, or whether the co-owner receives only their half of the property, with the other half being distributed via will or intestate succession. Additional information may be obtained from the Law Library of Congress if it is determined that the property at issue was acquired during the G~’s marriage.
If J~ had children with R~, and R~ also had other children, further research will be required to determine J~’s share of the property. Please contact us for follow-up if J~ reports these circumstances.
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.