Manual Requests for Asset Verification through the Asset Verification System (AVS), OPS180103 (Published January 30, 2018)
Real property includes any land and related outbuildings needed to operate the home.
Real property that is recorded under a separate deed is considered a separate piece of property even though it is bordering the resident property.
Real property that is separated into several sections by a road or other barrier (such as a power line) and is recorded under one deed is considered a single piece of property.
Real property includes cooperative and condominium apartments, mobile homes, motor homes and houseboats used as a residence.
There are two types of real property: resident or non-resident. Generally, the equity value for both types of property is considered an available resource unless excluded under other DHS rules.
The individual is responsible for verifying the FMV of the real property. The CAO then uses these steps to verify the value:
1. Determine and verify the current market value using:
A written and signed appraisal from a knowledgeable source such as a real estate broker or bank, savings and loan association, mortgage company, or similar lending institution.
Property tax assessment records.
NOTE: A property tax assessment record alone should not be used to determine the current market value (CMV). Not all municipalities use 100% of a property’s fair market value when determining the property tax. The CAO will multiply the assessed value by the common level ration factor to determine the FMV of the property.
See www.revenue.state.pa.us. Click on the Individual Taxpayers heading on the left side of the page. Then click on the Realty Transfer Tax section to get the current common level ratio (CLR) for the county where the property is located.
Example: Adams County’s common level ratio factor is 4.51. Mr. J’s non-resident property is assessed at $20,000. $20,000 times 4.51 equals $90,200. The property’s FMV is $90,200.
2. Get written proof from the individual of the amount of any debt against the property. The individual must verify the debt with individual records, creditor’s records, or a copy of an agreement or note showing the amount and date when the debt occurred. Verification includes, but is not limited to:
Tax notices.
Mortgage books showing the balance.
Document showing lien balances.
Statements received at settlement itemizing transfer costs
.
3. Determine the equity value by subtracting all liens, mortgages, and any other encumbrances recorded against the property from the CMV. Subtract all encumbrances and debts including, but not limited to:
Balances of mortgages, including primary, second, third, etc.
Home equity and other home improvement loans.
Tax liens for unpaid taxes.
Mechanics’ liens.
NOTE: A Mechanics’ lien is a guarantee of payment for contracted services, such as building a new home, for either real or individual property.
An individual can own real property in any of these five ways:
Sole Ownership – One individual owns all of the rights to the property and can sell the property.
Tenancy by the Entireties – This is usually the way a husband and wife take title to a property. Each individual owns an equal share of the entire property. To sell the property, the other owner must agree. If a spouse dies, the surviving spouse automatically becomes the sole owner.
NOTE: Only a husband and wife may own property by Tenancy by the Entireties.
Tenancy in Common –Two or more individuals each own a separate share of the property, with separate titles. The shares are not necessarily equal or half. Each owner is free to sell or borrow against his share of the property. If one owner dies, his or her share becomes part of his or her estate. One owner may sell, transfer or otherwise dispose of his or her share of the property without permission of the other owner(s). One owner cannot sell, transfer or otherwise dispose of the entire property.
Joint Tenancy with Right of Survivorship – There are two or more owners, each owning an equal share. When one of the owners dies, his share passes to the surviving owners. All owners must agree to sell the property. A joint tenant reserves the right at any time to file a petition to partition that would end the joint tenancy and give the joint tenant his/her share of the property.
Life Estate – An individual who owns property transfers ownership of that property to another individual. The individual who is transferring ownership keeps certain rights to that property for the rest of his or her life (or the life of another individual). A life estate usually entitles the life estate owner (the grantor) to possess, use, and get profits from the property as long as he or she lives. However, actual ownership of the property has passed to another individual
The resident property of an applicant or recipient will not be considered a resource.
For GA-related categories, the property is excluded as long as the applicant or recipient lives there. Any resident or nonresident real property owned by an SSI or SBP recipient who lives with the individual must not be counted as a resource for the individual.
For SSI-related categories, the property is excluded as long as it is lived in by a individual, his or her spouse, or a dependent relative.
The CAO must find out whether the individual owns, in whole or in part, real property that is his or her home or that was his or her home but is now the home of his or her spouse or a dependent relative. The spouse or dependent relative must sign a statement saying that he or she is a spouse or dependent relative who lives in the home.
NOTE: Dependency includes, but is not limited to, financial and medical dependency. The CAO will accept the statement of the individual or dependent relative unless the information is conflicting.
NOTE: Relative means son, daughter, grandson, granddaughter, stepson, stepdaughter, in-law, mother, father, stepmother, stepfather, grandmother, grandfather, aunt, uncle, sister, brother, stepbrother, stepsister, half-sister, half-brother, niece, nephew, or cousin. The CAO does not need to confirm the relationship unless there is reason to question the individual's statement.
If the individual owns several properties, the CAO will exclude only the one that is the individual’s home. The CAO will not exclude other properties owned by the individual and lived in by a spouse or a dependent relative. The individual will say which property is his or her home.
Temporary absences from the home (such as for trips, visits, and hospitalizations) do not affect the exclusion of the home as long as the individual plans to return to the home. An absence from the home of six months or more may show that the home is no longer the individual’s home. The CAO will take another look at the situation if the individual who is temporarily absent does not return to his or home when expected to. A written statement from an individual in an institution or from an individual acting for the individual is acceptable proof of the individual's plan to return.
The equity value of nonresident real property owned by an applicant or recipient or a legally responsible relative living in the home is counted. If the individual shares ownership, the CAO must find out if the share is legally available and, if it is, count the individual's share of the equity value.
Exceptions: For nonresident property that may be excluded, see the following sections:
The CAO will determine the equity value of the nonresident property as follows:
1. Determine and verify the fair market value using either of the following:
Property tax assessment records
NOTE: Not all taxing districts use 100 percent of a property's fair market value when figuring the property tax.
Example: Watson township taxes properties at 50 percent of the fair market value. Mr. Jones's nonresident property in the township has been assessed at $2,600 for tax purposes. The property's fair market value is $5,200.
A written and signed estimate from a knowledgeable source, including the following:
Real estate brokers.
The local office of the Farmers Home Administration or the Agricultural Stabilization and Conservation Service for rural property.
Banks, savings and loan associations, mortgage companies, and similar lending institutions.
An estimate, rather than an assessment, from an official of the local real property taxing agency.
The County Agricultural Extension Service.
Court records.
2. Determine the equity value by subtracting all liens, mortgages, and any other charges recorded against the property from the fair market value. Charges and amounts owed that may be deducted include, but are not limited to, the following:
The principal balances of mortgages, including primary, second, third, and so on.
Home-equity and other home-improvement loans.
Tax liens for unpaid taxes.
Amounts owed to DHS
Mechanics’ liens.
The amount of any penalty for paying off the mortgage early.
3. Obtain written proof of the amount of the debt against the property. The individual will show all individual records, creditors’ records, and copies of agreements or notes that show the amounts and the dates of all debts.
NOTE: The debt will be a legal debt against the property.
4. Compare the resource limit to the equity value (the market value of the nonresident property minus the debt owed on it) plus any other countable resources.
If the equity value of the countable, nonresident property combined with all other resources is the same as the resource limit or less, then no further action is needed. Review 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 applicant/recipient group, the CAO will tell the individual how he or she can sell the nonresident property.
For SSI-related categories of MA:
If the equity value of nonresident property plus other countable resources is more than the MA resource limit, the nonresident property will be excluded for six months if the applicant, recipient, or LRR makes a good-faith effort to sell it. The six month period begins on the date of the CAO notification that the individual must take steps to sell the non-resident property.
A good-faith effort includes:
Placing the property on the open market at fair market price with a licensed realtor in the area.
Accepting from the first qualified buyer an offer for at least the fair market value as set by the realtor.
NOTE: If the applicant/recipient refuses a reasonable offer, the nonresident property is counted as a resource at its equity value as of the date the offer is refused.
If the nonresident property is not sold by the end of the six-month period, the period may be extended another three months if there is good cause that the property did not sell. Good cause includes:
Severe weather conditions.
The general real estate market in the area.
Economic or labor problems in the area.
Type, conditions, and location of the property.
Unusual family situations, such as the death or serious illness of a family member.
For GA-related categories of MA:
If the equity value of nonresident property, when added to other countable resources, is more than the MA resource limit, the nonresident property is excluded for nine months if the applicant, recipient, or LRR makes a good-faith effort to sell it.
If the nonresident property is not sold by the end of the nine-month period, the period may be extended for more nine-month periods if there is good cause that the property did not sell. The good-faith effort and good-cause provisions for SSI-related MA also apply to GA-related MA.
The CAO will exclude the nonresident property while the individual is making a good-faith effort to sell it. If the individual does not make a good faith effort to sell the property, the CAO must count its equity value as a resource.
NOTE: A good-faith effort to sell nonresident property does not apply to retroactive MA eligibility. The equity value will be counted unless the property is needed for the individual’s support or income. However, if the individual can prove the property was for sale when he or she got the medical service, the property could qualify for the good-faith effort exclusion.
If the nonresident property is sold within the exclusion period, the CAO will count the net money from the sale as a resource.
If the property is not sold by the end of the exclusion period, the CAO will decide whether the property can be sold. Lack of interest or reasonable offers may show that the fair market value was set too high. Proof that the property cannot be sold includes an evaluation by the realtor, a statement from a property appraiser, severe economic conditions in the area, or a natural disaster affecting the property or general real estate market.
If the property cannot be sold, the CAO will continue to exclude it as a resource and review the situation at each renewal.
If the property can be sold, the CAO will count the equity value as a resource and review the applicant/recipient group's eligibility.
NOTE: For GA-related categories, all nonresident property, whether it makes income or not, will be counted or placed on the market for sale.
The CAO will count any income earned from the property while it is for sale.
If the equity value of the property when added to other non-excluded resources is less than the resource limit for the MA category, there is no need to put the nonresident property up for sale.
The CAO will not count property that is not used as a place of business but is essential to self support of the applicant or recipient. The property will be used exclusively to produce items for home consumption, such as cows giving milk, chickens laying eggs or a garden plot growing fruits or vegetables.
Real or personal property will be excluded if it is used as a place of business or used by the applicant or recipient as an employee and is used for the support of the applicant or recipient, no matter what the property’s value is.
Updated August 21, 2018, Replacing February 14, 2012