A.

Definition

Real property is land and houses. Real property is separated into two different categories: home property and other real property.

B.

Treatment

In determining whether a customer' s resources are within the resource limitations, any real property in which a customer has ownership interest must be considered.

Ownership of real property can consist of an interest in the title or a right to the use of the property without title to the property. The owner of real property is generally the person possessing legal title, and who has the right to control the property.

1.

Ownership by Title

Ownership by title may mean that the customer has sole ownership or a shared ownership interest in the title to real property. 

Listed below are types of ownership by title:

a.

Ownership in Severalty

When property is held in severalty, this means that the owner has the sole ownership interest. He alone (or, if mentally incompetent, the legal guardian) may sell or transfer the ownership interest without conditions imposed by others.

b.

Shared Ownership

Shared ownership means that ownership interest in the property is vested in more than one person. Shared ownership may be by joint tenancy, tenancy in common, community-property rights, or tenancy by the entirety. Whenever there is a change in ownership interest that limits the customer' s control of the asset (e.g., the customer adds the name of her son to the property' s title as a joint tenant), the change must be evaluated using the transfer of asset policy specified in Chapter 900.

NOTE:

Tenancy by the entirety does not exist in Arizona.

i.

Joint Tenancy

In joint tenancy, each of two or more joint tenants has an equal interest in the whole property for the duration of the tenancy. On the death of one of two joint tenants, the survivor becomes the sole owner. On the death of one of three or more joint tenants, the survivors are joint tenants of the entire interest.

ii.

Tenancy in Common

In tenancy in common, two or more persons have an undivided fractional interest in the whole property for the duration of the tenancy. There is no right of survivorship to a tenancy in common.

EXAMPLE: Don, Evan and Fred own property as tenants in common. Evan and Fred each own an individual one-fourth interest in the property. Don, who owns an individual half-interest in the property, could sell his interest to Stanley, who would then be a tenant in common with Evan and Fred. If Don dies, leaving one-half interest to his four children, then each heir owns an undivided one-eighth interest as co-tenants with Evan and Fred, who would each continue to own one-fourth interests.

iii.

Community Property

Community-property laws are based on the concept that a husband and wife, rather than merging into one entity, are equal partners. Thus, any property acquired during a marriage is considered to be obtained by mutual effort. Community-property states, such as Arizona, recognize two kinds of property: separate property and community property.

Separate property is that which is owned solely by either spouse before the marriage or is acquired by gift or inheritance after the marriage. This separate property also includes any property purchased with separate funds after the marriage. Any income earned from a person's separate property remains part of his separate property. Property classified as separate can be mortgaged or conveyed by the owning spouse without the signature of the non-owning spouse.

Community property consists of all other property, real and personal, acquired by either spouse during the marriage. Any conveyance or encumbrance of community property requires the signature of both spouses. Upon the death of one spouse, the survivor automatically owns one-half of the community property. The other one-half is distributed according to the deceased's will. If the deceased died without a will, the other one-half is inherited by his heir(s). If the deceased spouse left no will and no other heirs exist, the other one-half of the community property passes to the surviving spouse.

iv.

Tenancy by the Entirety

A tenancy by the entirety results when a conveyance is made to a husband and wife, where each becomes owner of the entire estate and after the death of one, the survivor takes the whole. Real property owned by a married couple by the entirety is marketable only by the consent of both parties. When a marriage has been legally dissolved, the former spouses become tenants in common of the property and either person can market his half-share.

c.

Life Estate

i.

A life estate is ownership by a right to the use of the property without title to the property.

ii.

Ownership by a life estate conveys upon an individual or individuals for his lifetime, certain rights in property. Its duration is measured by the lifetime of the tenant or of another person, or by the occurrence of some specific event, such as remarriage of the tenant. The owner of a life estate has the right of possession, the right to use the property, the right to obtain profits from the property and the right to sell his life estate interest. (However, the contract establishing the life estate may restrain one or more rights of the individual.)

iii.

The individual does not have title to the property and normally cannot sell it or pass the life estate on to his heir(s) in the form of an inheritance.

EXCEPTION: The owner of property may create a life estate for himself, retaining the power to sell the property, with a remainder interest to someone else, e.g., a child. This is referred to as a Life Estate With Powers. Since the life estate holder can sell the property, the full equity value of the property is considered a resource. (See MS 706.42.D)

iv.

When the owner of property gives it to another individual in the form of a life estate and designates a second individual to inherit it upon the death of the life estate holder, the second individual has a remainder interest in the property.

v.

Life estates and remainder interest are established by a deed, will, or other legal document.

vi.

An individual holding a remainder interest is free to sell his interest in the property even before the life estate interest expires unless sale is restricted by the legal instrument establishing the remainder interest.

vii.

A life estate may include mineral rights, grazing rights or oil leases as part of the estate.

viii.

Refer to MS 706.44.F. to determine the value of the life estate or remainder interest to be used in the eligibility determination.

ix.

When the customer or spouse transfers to another individual but retains a life estate interest but does not retain the right to sell the property, a transfer with uncompensated value may result. The amount of uncompensated value is determined by subtracting the current market value of the life estate interest (MS 706.42.F) from the current market value of the property transferred. The difference is the amount of uncompensated value.

x.

When the customer holds a life-estate interest in property that is the principal place of residence, the home property exclusion may be applied to the life estate interest. Refer to MS 706.26 to determine if the home property exclusion can be applied to the customer's life estate interest in home property.

d.

Interest in an Unprobated Estate

i.

The customer may have an ownership interest in an unprobated estate if he is an heir or relative of the deceased, or receives income from the property, or has acquired rights to the property due to the death of the deceased.

ii.

An unprobated estate means that a court procedure, by which a will of the decedent is proved to be valid or invalid, has not occurred.

iii.

A determination that ownership interest exists will be made when any of the following conditions exist:

• Documents (e.g., a will, court records, etc.) indicate the customer is an heir to all or certain property of the deceased;
• The customer has use of the property or receives income from such property;
• Documents establish or the customer alleges a relationship between the customer and the deceased which awards the customer a share in distribution of that property;
• The inheritance, use of income, and distribution rights are uncontested

xi.

To determine the value of the customer's ownership interest in an unprobated estate, follow the procedures established for determining the CMV of real property as described in Subsection D. below.

xii.

If there are any legal questions regarding an ownership interest in an unprobated estate, such as the estate is being contested, contact the Policy Unit. In many instances, a legal opinion will be required.

e.

Trusts

A trust is a property interest which an individual (trustee) has the right to administer for the benefit of another (beneficiary). The trustee who manages trust property usually has no ownership interest in the property, but is required by law to execute the trust. Generally, property is held in trust for an individual because the beneficiary is not capable of handling his affairs. The criteria for determining whether a trust is a countable resource is discussed in Chapter 800.

C.

Specific Verification

Verification of ownership of real property is required unless an exception appears in this chapter. The following documents may be utilized in establishing real property ownership:

1.

Deed;

2.

Assessment notice;

3.

Current tax bill;

4.

Current mortgage statement;

5.

Report of title search;

6.

Wills, court records, or relationship documents which show rights of an heir to the property after death of the former owner.

D.

Calculation

1.

Determining the CMV of Real Property

a.

The CMV of real property is the amount for which the property can be expected to sell on the open market in the surrounding geographic area and under existing economic conditions.

b.

To determine the CMV of non-excluded real property, obtain the county tax assessor's full cash value of the real property from the most recently issued tax assessment or tax bill (if the tax bill shows the full cash value of the property). 

i.

The tax assessment cannot be used to determine CMV of non-excluded real property if any of the following conditions apply:

• The assessment is more than one year old based on the date it was issued;
• The assessment is a special purpose assessment that does not contain a full cash value assessment;
• The assessment is under appeal;
• The assessment is based on a fixed rate per acre method;

c.

If the tax assessment can not be used to establish the CMV of the non-excluded real property because it meets one of the conditions listed in a. above, request that the customer obtain estimates of the property's CMV from two knowledgeable sources.

i.

The estimates must meet all of the following criteria:

• It must be written;
• It must be signed;
• It must contain the identity of the source;
• It must specify the effective date of the estimate.

ii.

Knowledgeable sources include the following:

• Banks, savings and loan associations, mortgage companies, and similar lending institutions;
• An official of the local real property tax jurisdiction (for an estimate rather than an assessment);
• The county Agricultural Extension Service;
• Real estate brokers;
• The local office of the Farmer's Home Administration (for rural land).

iii.

If the customer is unable to furnish the estimates, the EI must try to obtain free estimates from knowledgeable sources.

iv.

If the estimates provided from the knowledgeable sources are questionable (obviously too low or too high for the area) one or more additional estimates must be obtained.

d.

If the customer disagrees with the amount of CMV established using the county tax assessment, he may rebut the CMV as follows:

i.

The customer must obtain at least two current estimates of the value of the real property from knowledgeable sources who are acquainted with the worth of the property in the area. The estimates must meet the criteria outlined in 1.c. above and must be dated no earlier than 90 days prior to the date of submission to the Policy Unit.

ii.

The customer may submit any additional information which shows that the value of the property in question is less than that initially determined;

iii.

The Eligibility Specialist must submit all evidence concerning the initial determination of CMV already in the case record, the two current estimates of the value from knowledgeable sources and any additional information provided by the customer (as per 1.c. above) to the BOE Policy Unit for a final determination of the CMV of the non-excluded real property.

E.

Specific Documentation

1.

Include in the case record documentation of all verification obtained as evidence as well as the names and addresses of any knowledgeable sources contacted.

2.

Whenever a tax assessment or tax bill is used, document the case record with the contents of the assessment notice or tax bill showing the full cash value and the period to which it applies. If any of this information is not shown on the document, record in the case record the information and the contact providing it

F.

Determining CMV of Life Estate Interest

1.

To determine the CMV of a life estate interest in property held by the customer, use the following steps to determine the considered amount:

a.

Determine the CMV of the property (see D. above);

b.

Use the table found in Appendix 7A;

c.

Find the line for the individual's age as of the last birthday;

d.

Multiply the figure in the life estate column for the age by the CMV of the property to determine the value of the life estate;

e.

Record the computation in the case record.

2.

To determine the CMV of a remainder interest in a life estate held by the customer, use the following steps to determine the considered amount:

a.

Determine the CMV of the property (see D. above);

b.

Use the table found in Appendix 7A;

c.

Find the line for the individual's age as of the last birthday;

d.

Multiply the figure in the remainder interest column for the age by the CMV of the property to determine the value of the remainder interest in the life estate;

e.

Record the computation in the case record.

3.

When the customer has placed his property in a life estate with powers, the full equity value of the property is a countable resource as the customer retains the right to sell the property. (See Exception in MS 706.44.B.1.c.iii.)

G.

Determine CMV of Un-probated Estate

To determine the CMV of one's ownership interest in an un-probated estate, determine the CMV of the real property as described in D. above and multiply this value by the customer's percentage of ownership.

1.

If a decision cannot be made on either the ownership interest or the individual's share under the above procedures, proceed with documenting the case as shown in the steps in G.3. below and submit the issue to the Policy Unit for further direction or referral to legal counsel.

2.

If the nonexcludable value of property causes the customer's resource limit to be exceeded, it is necessary to determine if he could sell his share without permission. If consent of the other owners to sell is obtained, but the customer refuses to sell his ownership share, the value of the customer's ownership interest counts toward the resource limit. If the other owner's consent is not obtained, the customer's share is not counted as a resource. Document the case accordingly.

EXAMPLE: Mrs. Hazel Brooks is an heir to real property in the estate of her widowed grandfather, Charles Wolf, who died without a will. Mr. Wolf had ten surviving heirs (all of an equal degree of relationship to him). Mrs. Brooks does not live on the property or receive any income from it. The CMV of the real property has been determined to be $30,000.

Mrs. Brooks inherited a one-tenth individual interest in the property. The value of Mrs. Brooks' interest is $3,000. Since she does not live on the property or receive any income from it, the $3,000 ownership interest is a countable resource to her, if she can dispose of the interest in the property and has consent of the other heirs to sell her interest. If she does not have the ability to dispose of the property, it will not be counted as a resource until the estate is probated.

3.

When ownership interest in an unprobated estate is present, document the case record with information contained on the inheritance or relationship document (or a signed statement alleging relationship), evidence of income, statement by the customer of use of the estate and whether any factor is being contested.

H.

In determining the CMV of nonexcluded real property, life estates and ownership interest in unprobated estates, use the equity value if CMV causes ineligibility. 

(CMV - encumbrances = equity)

I.

To determine what portion of the nonexcluded real property is considered a countable resource, the type of ownership, the number of additional owners, and the customer's actual ownership interest must be considered.

1.

If the customer is the sole owner of property and has the right to dispose of the property, the entire CMV of the property is a countable resource.

2.

If the property is jointly owned by two or more individuals, the value of the property is a countable resource to the customer in proportion to his ownership interest

a.

In joint ownership, a property's value is divided by the number of owners in proportion to the ownership interest of each to determine the customer's ownership interest. If the resulting ownership interest, plus the considered amount of other countable resources, exceeds the applicable resource limits, proceed as shown in c.iii. - vi. below.

b.

In ownership by the entirety, if a married couple lives together, the entire value of the property is a countable resource.

c.

If the married couple have been separated for more than one month, follow the procedures below:

i.

Determine whether ownership by the entirety is involved. If both members allege ownership by the entirety, accept the allegation without further action.

ii.

If half of the property's value together with the considered amount of other countable resources does not exceed the applicable resource limit, no further action is necessary because, regardless of the customer's right to sell his share, the resource level would not be exceeded.

iii.

If half of the property's value, together with the considered amount of other countable resources exceeds the applicable resource limit, determine if the customer is free to sell his interest.

iv.

If the customer cannot sell his share of the property because the other owner will not consent, request that he obtain a statement to that effect.

v.

If it is established (in writing) that the other owner refuses to consent to the sale of the property, the property cannot be considered a countable resource.

vi.

If the customer can sell his share of the property and the other owner agrees to sell, one-half of the property's value is a resource to the individual.

3.

The value of an individual's ownership interest in jointly owned real property, even when this is not the customer's principal place of residence, is an excluded resource for as long as sale of the property would cause undue hardship, due to loss of housing, to a co-owner.

Undue hardship results when all of the following apply to such co-owner:

a.

The property is used as the co-owner's principal place of residence;

b.

He would have to move if the property were sold;

c.

He has no other readily available housing.

A.

Definition

Relocation Assistance payments are those received from a fund established by a State or local government for this purpose.

B.

Treatment

Unspent payments are excludable from resources for nine months, beginning with the first month following the month of receipt. 

On or after July 1, 2004, interest earned on unspent relocation payments is excluded income.

Prior to July 1, 2004, interest earned on unspent relocation assistance payments is countable income in the month of receipt and a countable resource in the month following the month of receipt, if retained.

A.

Definition

Relocation Assistance and Real Property Acquisition payments are those made under Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (84 Stat. 1902, 42 U.S.C. 4636).

B.

Treatment

The payments are excluded as income in the month received and excluded as a resource if retained and separately identifiable (MS 703.05).

A.

Definition

Funds received from any source for the purpose of replacing or repairing a resource that is lost, damaged or stolen.

B.

Treatment

1.

When Excluded

This exclusion applies if the funds and the accrued interest are used to replace or repair the excluded resource within nine months of the date the funds were received.

This exclusion can be extended an additional nine months and an additional twelve months beyond that (for a total exclusion of 30 months) as long as circumstances beyond the individual' s control prevented the repair or replacement of the damaged or destroyed property, and such circumstances kept the individual from contracting for such repair or replacement. 

Interest earned on funds excluded under this provision is excluded from income and resources.

2.

When Counted

Replacement or repair funds are counted if not spent by the end of 30 months.

A.

Definition

1.

Pensions

A pension means a retirement benefit paid regularly (normally monthly). The amount is generally based on length of employment and amount of wages or salary of pensioner. Some retirement payments are called annuities; e.g., civil service annuities.

2.

Periodic Retirement Benefits

Periodic retirement benefits means payments made to an individual at some regular interval (e.g., monthly) which result from entitlement to a retirement fund

3.

Retirement Funds

Retirement fund means annuities or work-related plans for providing income when employment ends (such as a pension, disability or retirement plan administered by an employer or union) or funds held in individual retirement accounts (IRAs) or Keough accounts.

4.

Value of Retirement Funds, Pensions and Annuities

Value of a retirement fund means the amount of money an individual can currently withdraw from the account. If there is a penalty assessed for early withdrawal, the value reflects the amount available after these penalties are deducted. If taxes are owed on the funds, any taxes due are not deducted in determining the value of the retirement fund.

B.

Treatment

1.

Each retirement fund account, pension plan or annuity must be evaluated individually to determine its specific conditions, how payments are made, and restrictions or limitations, if any, on withdrawal of principal.

2.

If a customer owns a retirement fund account, pension plan or annuity and is eligible for periodic payments, the customer must apply for these benefits. See MS 524.00 for information on requiring a customer to apply for potentially available benefits. See MS 524.02.G for instructions when a person is receiving Long Term Disability (LTD) payment from the same source. 

3.

Periodic payments are considered as income in the month received (MS 604.00).

4.

If the customer owns a retirement fund account or annuity and is not eligible for periodic payments, but has the option of withdrawing the funds, the retirement fund account or annuity, or any portion of it which may be withdrawn, is counted as a resource, unless the customer must terminate employment to obtain the funds.

C.

Specific Verification

Verification must be obtained in one of the following ways:

1.

Legal Document 

Copies of legal documents are acceptable verification if the following information is available:

a.

Name and address of the owner;

b.

Name and address of the payer of the fund;

c.

Terms and conditions of the fund, which clearly indicate the conditions of the withdrawal;

d.

Date of the document; and

e.

Amount currently available.

NOTE:

When it is not possible to make a photocopy of the policy, if all the information as specified in a. - e., above, is available, the information from the legal document may be recorded on a Permanent Verification Record form (DE-119) which is acceptable as permanent verification for the case file.

2.

Statement

A written or collateral statement from the payer of the fund is acceptable if all of the information indicated in C.1., above, is provided as well as the name, telephone number and title of the person providing the information

3.

Request for Verification of Unearned Income (DE-207) Form

The Request for Verification of Unearned Income (DE-207) form may be used to verify the pension or retirement amount.

D.

Calculation of Value of Retirement Funds and Pension Plans

1.

If the retirement fund is available for withdrawal, even if the withdrawal is delayed for reasons beyond the customer's control (e.g., an organization's processing time), the retirement fund is