Real property is separated into two types:
Real property owned solely by a stepparent is exempt when determining eligibility for a stepchild. The stepparent is not subject to reimbursement requirements.
Real property owned by a noncitizen's sponsor is discussed in Chapter 122.
The equity value of real property owned by an SSI recipient is not counted even if they are a legally responsible relative (LRR) to the budget group. The SSI recipient is not required to sign reimbursement forms.
Real property can be owned in the following ways:
Sole Ownership: One person owns all of the rights to the property.
Tenancy by the entireties: Each spouse has an equal share in the property and mutually owns the entire estate.
Tenants in common: There are two or more owners, each owning an equal share. Each owner is free to sell or borrow against their share in the property. Upon one's death, the deceased owner’s share becomes part of their estate.
Joint tenancy with right of survivorship: This is similar to Tenants in Common except that, when one of the owners dies, their share passes to the surviving owners.
Life Estate: This involves a life tenant and a remainderman, each holding simultaneous interests in the same property. The life tenant enjoys use of the property during their lifetime or the lifetime of another person. The remainderman receives their full interest upon termination of the life interest.
55 Pa. Code § 177.23(a) 55 Pa. Code § 177.23(b)
The CAO must consider the resident property of a budget group as an exempt resource. This exemption will apply as long as the property is used as the residence by the budget group owner, their spouse, or their minor or incompetent adult children.
The CAO must count the equity value of nonresident property owned by a budget group member or a legally responsible relative (LRR) as available to budget group members as a possible resource. The CAO must verify ownership and the equity value of all identified non-resident property.
NOTE: The regulations concerning nonresident real property apply to an SBP recipient in the common residence who is an LRR to a member of the budget group. They do not apply to an SSI recipient, even if they are an LRR to a member of the budget group.
The CAO must determine the equity value of the nonresident property. (See Section 140.631.)
If the equity value of the property combined with all other resources is less than or equal to the resource limit for the budget group, no further action is needed. The CAO must re-evaluate the equity value of the nonresident property at each renewal.
If the equity value combined with all other resources is greater than the resource limit for the budget group, the CAO must do the following:
Determine the budget group member’s percentage of ownership in the nonresident property.
Discuss the steps required to sell the nonresident property. (See Section 140.632.)
The way a budget group member owns nonresident property determines if it is to be considered as a resource.
If the budget group member is the sole owner or owns a share as tenants in common, they can sell their interest. Therefore, the property is an available resource and is counted toward the budget group’s resource limit subject to the exemption in Section 140.632.
If the budget group member owns the property as tenants by the entireties, in tenancy with right of survivorship, or in a life estate, the permission of the other owners of the property is needed to sell it.
The CAO must obtain verification from all other owners as to whether or not they will give their permission to sell the property. If permission is not granted, the nonresident property cannot be sold and is not considered a resource to the budget group member.
Exception: If an LRR lives with the budget group and owns nonresident property which cannot be sold, they are required to sign a Reimbursement Agreement (FAIR 176-K), agreeing to repay the assistance received when the nonresident property is sold. See Supplemental Handbook Chapter 915, Reimbursement, for details.
Example: Mr. and Mrs. Bains apply for assistance for Mrs. Bains and her son by a previous marriage, Charles. Mr. Bains owns nonresident property. The property was purchased for investment with two partners. The CAO verifies that they own the property as joint tenants with right of survivorship. Both partners refuse to sell the property. Since their permission is required, Mr. Bains cannot sell his share of the property.
The equity value of the property is not counted in determining eligibility. However, Mr. Bains is required to sign a FIRM 176-K to reimburse the assistance received for Mrs. Bains when the property is sold.
If nonresident property is counted as a resource, the CAO must verify the property's fair market value and equity value.
The fair market value can be verified by the following:
Property tax assessment records
NOTE: Not all municipalities use one hundred percent of a property's fair market value when determining the property tax.
Example: Watson Township taxes properties at fifty percent of fair market value. Mr. Jones's nonresident property in the township has been assessed at $2,600 for tax purposes. The property has a fair market value of $5,200.
Statement from a licensed real estate broker
Statement from a real estate appraiser
Statement from a financial institution
Court records
The equity value of nonresident real property is determined by subtracting all liens, mortgages, and any other encumbrances recorded against the property from the fair market value.
The kinds of encumbrances that may be deducted include, but are not limited to, the following:
The principal balances of mortgages; including primary, second, third, etc.
Home equity and other home improvement loans
Tax liens for unpaid taxes
Mechanic's liens
The CAO must keep documentation of all encumbrances for three years from the date of the decision.
If by itself or when added to the other resources the equity value of the nonresident real property is more than the resource limit for the budget group, the budget group is ineligible for assistance.
Exceptions:
Members of the budget group for whom the owners of the nonresident property are not LRRs remain eligible.
The equity value of nonresident property is exempt for up to nine months if the budget group meets the conditions in Section 140.632.
The equity value of nonresident property owned by a budget group member or LRR living with the budget group may be exempt from consideration as a countable resource for up to nine months.
For applicants, the nine-month exemption period starts on the date assistance is authorized. For recipients, the exemption period starts on the date the property is obtained.
To be eligible for the exemption, the budget group member owners must meet all the following conditions:
They make a good faith effort to sell the property.
They sign an agreement to dispose of real property. This form is retained in the case record.
NOTE: The agreement to dispose of real property is also used for nonresident mobile homes. If a budget group member owner refuses to sign the agreement, they and any other members of the budget group to whom they are an LRR to, are ineligible for assistance.
They agree to repay the amount of assistance received during the exemption period.
NOTE: The amount to be repaid will not be more than the net amount received from the sale of the property.
The assistance received during this period is subject to recovery. The repayment of this amount satisfies the overpayment.
Reminder: If the property is not sold after a reasonable period of time (three to five months), the CAO should suggest that the property’s fair market value be reevaluated. Lack of interest or reasonable offers are signs that the fair market value previously set may be too high. A reevaluation might lead to the property being sold or cause the budget group’s countable resources to fall within the limits.
In cases where the family has been unable to sell nonresident property for reasons beyond their control, the nine-month time limit for disposing of such property before the equity value is counted as a resource may be extended for additional nine-month periods. At the end of each additional nine-month period, it must be substantiated that a good faith effort to sell the property is still being made. Otherwise the equity value will no longer be exempt.
55 Pa. Code § 177.22(b)(3)(ii)
The amount of assistance actually received during the exemption period is an overpayment and subject to recovery. The CAO must complete an overpayment referral according to Supplemental Handbook Section 910.5.
If the property is sold during the exemption period, the CAO must review the budget group’s eligibility. Proceeds from the sale of the property are counted as a resource during the month of receipt. The amount of assistance received during the exemption period is an overpayment. The CAO will complete an overpayment referral according to Supplemental Handbook Section 910.5.
Example: Mr. Alda applies for assistance on April 1. He reports ownership of legally available nonresident real property. He signs the agreement to dispose of real property and receives the nine-month exemption. The period runs from April 1 through December 31.
Mr. Alda’s case is closed effective June 30, because he is now working.
The CAO completes an overpayment referral.
Mr. Alda loses his job and reapplies for benefits in August. He reports continued ownership of the original nonresident real property. Mr. Alda is found eligible for benefits. He also receives the remaining balance of time from the original nine-month exemption period, which is five months.
The CAO processes an overpayment referral.
An overpayment may be filed separately for failure to report a resource such as nonresident property.
Examples:
Mr. Borgnine applies for assistance on June 1, 2007. He reports no ownership of any real property and is found eligible. On July 1, 2008, the CAO verifies that Mr. Borgnine does, in fact, own nonresident real property: a structure used as a small naval base on an island in the South Pacific. He has owned the nonresident property since 1944. The property has an equity value of $3,000. Because Mr. Borgnine failed to report ownership of nonresident property, the CAO completes an overpayment referral for the period June 2007 through June 2008. The referral is sent to the OSIG for recovery action. Mr. Borgnine now has nine months in which to sell the property, beginning July 2008, if he agrees to make a good faith effort to sell the property.
Mr. Wilson applies for assistance on July 14, 2007. He reports ownership of nonresident property. Mr. Wilson provides a property tax bill, which verifies that the property has a fair market value of $3,000. There are no liens or encumbrances. Therefore, the equity value is also $3,000. Mr. Wilson signs the agreement to dispose of real property and is determined eligible for assistance. On September 5, Mr. Wilson reports that no one has shown any interest in the property. A new assessment of the property’s fair market value is made by a real estate agent. The agent determines that the property now has a fair market value of $2,000. Mr. Wilson is advised that, even though the reevaluation has lowered the property’s fair market and equity values, the equity value remains in excess of the resource limit and he is still required to attempt to sell the property. The property remains unsold as of the end of March 2008, and Mr. Wilson discontinued a good faith effort to sell the property. Mr. Wilson’s case is closed effective with the first check of April 2008.
Mr. Arbus, a member of a TANF budget group, reports the sale of his nonresident real property by an article of agreement (also known as an agreement of sale). The total sale price is $10,000. He receives a down payment of $2,000 and will receive the balance through monthly payments of $150 toward the remaining $8,000 until the article of agreement is satisfied. Of the $150 a month payment, $100 is principal and $50 is interest.
The budget group’s resources exceed the resource limit based on the $2,000 down payment, and the budget group is ineligible unless its resources fall below the limit.
NOTE: It is important to remember that Mr. Arbus will receive $100 a month that is considered a resource and $50 a month that is considered interest income.
Principal = Resource
Interest = Income
Mobile homes are treated the same as real property. The requirements in Section 140.62 regarding resident property and Section 140.63 regarding nonresident property apply. However, there are differences described below.
A mobile home may not have a deed to verify ownership. Therefore, ownership may be verified by a paid receipt from a mobile home dealer or a title of ownership, similar to an automobile title.
NOTE: A mobile home is not to be confused with a motor home or camper. A motor home is considered a motor vehicle, unless it is being used as a client's residence.
Revised August 28, 2020, replacing September 20, 2012.