Situation: Mr. Dottle, an SSI applicant, sold a parcel of land to a neighbor for $3,000 plus
interest. Mr. Dottle received a $1,500 cash down payment. The real estate contract
specifies that the remaining $1,500 will be repaid at 5% interest over the next 2
Analysis: The farmland is no longer Mr. Dottle's resource even though it is still his property.
Because he is bound by an agreement to sell that land, he cannot transfer title to
anyone else. Mr. Dottle has converted his ownership interest in the land into a real
estate contract. The CR determines that there is no legal restriction against converting
the contract into cash, so it is Mr. Dottle’s resource. The initial value of the contract
is the $1,500 outstanding principal balance. Counting the $1,500 principal balance
as a resource, Mr. Dottle is still under the $2,000 resource limit. Because this contract
is a resource, the principal portion of the monthly payment he receives is not income,
but the interest portion is unearned income. To determine the amount of the principal
and interest portions, the CR obtains an amortization schedule with $1,500 as the
amount of the contract, 5% interest rate, and a 24 month payment period.