SSR 89-3a: SECTION 1613(a)(1) OF THE SOCIAL SECURITY ACT (42 U.S.C. 1382b(a)(1)) SUPPLEMENTAL SECURITY INCOME -- EXCLUSIONS FROM RESOURCES -- LAND APPURTENANT TO HOME

20 CFR 416.1212, 416.1232(a), AND 416.1246(a)(1)

: When the claimant applied for supplemental security income (SSI) benefits on October 12, 1983, he owned two adjoining lots in a subdivision (Lots 5 and 6). The claimant's home was on Lot 5 and a cottage was on Lot 6. An administrative law judge (ALJ) decided on September 28, 1987, that the claimant was ineligible for SSI benefits for the entire period covered by his application because he had excess resources. The ALJ found that Lot 6 was a countable resource, the value of which exceeded the statutory limit for October 1983 through September 1986. The ALJ also found, under 20 CFR 416.1246(a)(1), that the claimant was ineligible for SSI benefits for at least 24 months from September 29, 1986, because, on that date, the claimant had transferred Lot 6 and the cottage thereon to his brother, and had not received any compensation for this transferred property. The Appeals Council (AC) did not agree with the ALJ's decision. Section 1613(a)(1) of the Social Security Act and 20 CFR 416.1212 provide that, in determining an individual's eligibility for SSI benefits, the individual's home is excluded from countable resources. The home exclusion applies to any land which appertains to the home and to any other buildings located on that land. To appertain to the home, the real property must adjoin the plot on which the home is located and may not be separated from it by intervening real property that is owned by others. Where real property adjoins the plot on which the home is located and has contact with that plot, it does not matter if there is more than one document of ownership (e.g., separate deeds). Nor does it matter if the home was obtained at a different time from the rest of the real property or if the holdings are assessed and taxed separately. Accordingly, the claimant's two adjoining lots and the buildings thereon constituted the claimant's home and thus, were excluded from countable resources. The regulation at § 416.1246(a)(1) provides that "an individual . . . who gives away . . . a nonexcluded resource . . . for the purpose of establishing SSI . . . eligibility will be charged with the difference between the fair market value of the resource and the amount of compensation received . . . for a period of 24 months from the date of transfer." Since this provision applies only to the disposition of nonexcluded resources, it did not apply to the transfer of Lot 6, including the cottage thereon, because that property was an excluded resource. Moreover, under 20 CFR 416.1232(a), the insurance settlement that the claimant had received on or shortly after January 24, 1984, to replace the cottage on Lot 6, which had been destroyed by fire in or prior to January 1984, was not a countable resource, because the insurance settlement was for replacement of the cottage, an excluded resource, and the claimant used the proceeds from that settlement to rebuild the cottage within 9 months after the proceeds were received. In reversing the ALJ's decision, the AC held that, for purposes of establishing eligibility for SSI benefits, the claimant did not have excess resources.

The issue before the Appeals Council (AC) was whether the claimant had excess countable resources that precluded his eligibility for supplemental security income (SSI) benefits.

On October 12, 1983, the claimant, born October 20, 1914, applied for SSI benefits. At the time of filing, the claimant owned two adjoining lots in a subdivision (Lots 5 and 6). Lot 5 was purchased by the claimant and his wife prior to 1971. The home in which the claimant resided was on Lot 5. Only July 30, 1971, the claimant and his wife purchased the adjoining Lot 6 and the cottage that was standing on that lot. Upon his wife's death on May 23, 1978, sole ownership of both lots passed to the claimant. The cottage on Lot 6 was destroyed by fire in or prior to January 1984. The claimant received an insurance settlement on or shortly after January 24, 1984, and rebuilt the cottage with the insurance proceeds. On September 29, 1986, the claimant transferred the title to Lot 6 and the cottage to his brother by a quitclaim deed. The claimant did not receive any compensation for the transferred property.

In his decision of September 28, 1987, an administrative law judge (ALJ) decided that the claimant was ineligible for SSI benefits for the entire period covered by his application because he had excess resources. The ALJ found that Lot 6 was a countable resource the value of which exceeded the statutory resource limit for October 1983 through September 1986. The ALJ also found, under § 416.1246(a)(1) of the regulations, that the claimant was ineligible for SSI benefits for at least 24 months from September 29, 1986, because on that date, the claimant had transferred Lot 6 for less than the fair market value to maintain his eligibility for those benefits.

The AC did not adopt the findings and conclusions of the ALJ. Section 1613(a)(1) of the Social Security Act (the Act) excludes from resources an individual's home, including the land that appertains thereto. Section 416.1212(a) of the regulations defines a home as --

: ". . . any property in which an individual (and spouse, if any) has an ownership interest and which serves as the individual's principal place of residence. This property includes the shelter in which an individual resides, the land on which the shelter is located and related outbuildings."

Under the Act and the implementing regulations, the home exclusion applies to any land which appertains to the home and to any other buildings located on such land. To appertain to the home, the real property must adjoin the plot on which the home is located and may not be separated from it by intervening real property that is owned by others. Where real property adjoins the plot on which the home is located and has contact with that plot, it does not matter if there is more than one document of ownership (e.g., separate deeds). Nor does it matter if the home was obtained at a different time from the rest of the real property or if the holdings are assessed and taxed separately. Accordingly, the AC concluded that Lots 5 and 6 of the subdivision along with the house on Lot 5, the cottage on Lot 6, and any other structures on either lot constituted the claimant's home and thus, were excluded from countable resources under section 1613(a)(1) of the Act and § 416.1212 of the regulations.

Under § 416.1232(a) of the regulations, cash received for purposes of repairing or replacing an excluded resource that is lost, damaged, or stolen is excluded as a resource if the cash is used to repair or replace the excluded resource within 9 months of the date the individual received the cash. In this case, the claimant, within 9 months after receipt, used the proceeds from the insurance settlement to rebuild the cottage on Lot 6 that had been destroyed by fire. Thus, the AC further concluded that the insurance settlement which the claimant had received to replace an excluded resource (the cottage) was not a countable resource.

Section 416.1246(a)(1) of the regulations states that --

: "An individual . . . who gives away or sells a nonexcluded resource for less than fair market value for the purpose of establishing SSI . . . eligibility will be charged with the difference between the fair market value of the resource and the amount of compensation received. The difference is referred to as uncompensated value and is counted toward the resource limit . . . for a period of 24 months from the date of transfer."

Section 416.1246(a)(1) applies to the disposition of nonexcluded resources. Lot 6 (along with the cottage thereon), however, was an excluded resource at the time the claimant transferred that property to his brother. Thus, § 416.1246(a) of the regulations did not apply to the claimant's disposition of Lot 6. The AC found that there was no statutory or regulatory provision for charging the claimant with the uncompensated value of Lot 6, an excluded resource.

In view of these findings, it was the decision of the AC that neither an ownership interest in Lots 5 and 6 of the subdivision, nor the receipt and possession on or after January 24, 1984, of the proceeds from the insurance settlement, nor the disposition of Lot 6 on September 29, 1986, precluded the claimant's eligibility for SSI benefits. Therefore, the AC reversed the decision of the ALJ.

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