SSR 82-6: SECTIONS 1611(a)(1)(B) and 1613(a) (42 U.S.C. 1382(a)(1)(B) and 1382b(a)) SUPPLEMENTAL SECURITY INCOME -- NONEXCLUDABLE RESOURCES -- PROPERTY AGREEMENTS
20 CFR 416.1201, 416.1220, and 416.1224(a)
SSR 82-6
- The claimant applied for supplemental security income (SSI) benefits in January 1980. When the Social Security Administration (SSA) determined that a contract for deed, which the claimant has owned since selling certain real property in 1972, was a countable resource with a value of $3,950, it denied the claimant's application because her resources exceeded the statutory limit. Consequently, the claimant filed an appeal, contending that her interest in the property was a nonliquid resource which should be excluded under 20 CFR 416.1224(a) as property essential to self-support. The contract for deed meets the definition of a liquid resource in 20 CFR 416.1201(b) and may be converted to cash within 20 work days.[1] In the case of nonbusiness property, 20 CFR 416.1220 provides that the exclusion of property essential to self-support does not apply to liquid resources, even if they are producing income. Held, the contract for deed is a countable resource and its value exceeds the statutory limit; therefore, the claimant is ineligible for SSI benefits.
It has been determined that the claimant meets all factors of eligibility for SSI benefits except with respect to the question of her resources. Accordingly, the issue is whether the claimant's resources, other than resources excluded pursuant to section 1613(a) of the Social Security Act (the Act), are not more than $1,500 as provided in section 1611(a)(1)(B)(ii) of the Act. The specific issue to be determined is whether the outstanding balance on a contract for deed is a countable resource for determining the claimant's eligibility for SSI benefits.
The claimant filed an application for SSI benefits on January 11, 1980. Her request was initially denied on February 14, 1980, because of excess resources. Following a request for reconsideration, the claimant's application was again denied on February 22, 1980. The claimant then requested a hearing before an Administrative Law Judge.
The evidence of record in this case indicates that on August 10, 1972, the claimant executed a contract for deed for the sale of certain real property. The purchase price of the property was $8,000. The buyers made a down payment of $800 upon execution of the contract for deed and the arrangements for the balance read as follows: "$55.84 on October 1, 1972, and $55.84 on the first day of each month thereafter until October 1, 1982, on which date the entire unpaid balance due hereunder shall become due and payable in full, with interest from September 1, 1972, on the unpaid balance from time to time at the rate of 7% per annum, payable monthly, with and as part of said monthly installment payments, said monthly installment payments to include both principle and interest and said payments shall be applied first to the payment of the interest due on the first day of each and every month, and the remainder in reduction of the principle." As of the date of the claimant's application for SSI benefits, the outstanding balance on the contract for deed was $5,637.22. A letter from a bank, dated January 9, 1980, indicated that the bank would buy the contract for deed, if offered, for $3,950. This valuation appears consistent with the claimant's equity in the contract for deed.
The claimant's attorney has presented a written argument on her behalf in which she argues that the claimant's interest in the property in question should be considered a nonliquid resource which should be excluded in determining the claimant's eligibility for SSI benefits as a property essential to her self- support.
Section 1611(a)(1) of the Act provides, in part, that each aged, blind, or disabled individual ". . . whose resources, other than resources excluded pursuant to section 1613(a), are not more than . . . $1,500, shall be an eligible individual for purposes of this title."
Section 1613(a)(3) of the Act excludes from an individual's resources "other property which, as determined in accordance with and subject to limitations prescribed by the Secretary, is so essential to the means of self-support of such individual . . . as to warrant its exclusion."
Section 416.1201(a) of Regulations No. 16 defines "resources" as cash or other liquid assets or any real or personal property that an individual (or spouse, if any) owns and could convert to cash to be used for his support and maintenance. If the individual has the right, authority or power to liquidate the property, or his share of the property, it is considered a resource. If a property right cannot be liquidated, the property will not be considered a resource of the individual (or spouse).
Section 416.1201(b) of Regulation No. 16 defines "liquid resources" as those assets that are in cash or are financial instruments which are convertible to cash. Liquid resources include cash on hand, cash in savings accounts or checking accounts, stocks, bonds, mutual fund shares, promissory notes, mortgages, and similar properties.
Section 416.1201(c) of Regulations No. 16 defines nonliquid resources as all other properties. The term includes both real and personal property.
Section 416.1220 provides that the exclusion of property essential to self-support applies to both property used in a trade or business and to property not used in a trade or business. In the case of property not used in a trade or business, however, the exclusion does not apply to liquid resources, even if they are producing income.
Section 416.1224(a) of Regulations No. 16 provides for the exclusion of nonliquid property which although not used in a trade or business is essential to the individual's self-support.
The argument presented by the claimant's counsel has not persuaded SSA that the claimant's contract for deed is a nonliquid resource to be excluded under § 416.1224(a) of Regulations No. 16 as a property essential to her self-support. The contract for deed meets the definition of a liquid resource in § 416.1201(b) of Regulations No. 16 because SSA considers property liquid in nature if it can be converted to cash within 20 work days. The bank, in its letter of January 9, 1980, has reinforced the liquidity of the contract for deed by expressing a willingness to purchase it. Section 416.1220 of Regulations No. 16 specifically provides that, in the case of nonbusiness property, the exclusion of property essential to self-support does not apply to liquid resources, even if they are producing income. Hence, the contract for deed is a countable resource and its value exceeds the $1,500 statutory limit; consequently, the claimant is ineligible for SSI benefits.
[1] SSR 79-12 (C.E. 1979) provides that liquid resources are those properties that are in cash or are financial instruments which are convertible to cash within 20 work days. [ED]