Excess Real Property Exclusion

[EAS 42-213.12]

Nine-Month Exclusion

Real property, not otherwise excluded, may be exempt from consideration in the resource limit for a ONE-TIME ONLY period of no more than nine (9) consecutive months if the AU demonstrates a good faith effort to sell the property. Refer to Applicant/Recipient Responsibility for the definition of “good faith effort.”]

The EW MUST inform the client of all of the following at the time this exemption is granted:

The exemption is limited to a ONE-TIME ONLY period of no more than nine consecutive months;
If the property has not been sold at the end of the nine-month period, aid must be discontinued;
A break in aid does not alter the nine-month period.
A lien must be signed against the property.

Example Example An applicant with excess real property is set up on aid effective 4/1. Aid is discontinued for no SAR 7 effective 10/31. The client reapplies for aid in December. If all other eligibility conditions are met, the client can receive aid for December. Aid must be discontinued effective 12/31. The client cannot receive aid again until the property is sold and all other conditions of eligibility are met.

The three months discussed previously (refer to Excluding Home During Marital Separation) can be given in addition to the nine months discussed above for a total of twelve months, if circumstances permit.

Inability to Use Nine-Month Exclusion

The nine-month period CANNOT be extended except in the following circumstances:

If the client loses the legal ability to sell the property such as when it is tied up in litigation, the property will be considered unavailable.
The nine-month period will stop running effective the month in which the property becomes unavailable.
The nine-month period will resume beginning the month following the month in which the property becomes available again.
A new “Agreement to Sell Property” (CW 82) must be signed when the property becomes available again. A new “Agreement to Reimburse” (SC 355) is not required.

Example Example An applicant signs an excess property lien and is eligible for CalWORKs beginning in January. On April 14th a law suit is filed by creditors with a lien against the property which prohibits its sale. The nine months stops running at the end of March. Three of the nine months have been used. On September 21st the litigation is completed and the property is again available. The period resumes in October and will expire at the end of next March.

When a client has previously signed an excess property lien agreement and received aid in another state, a new lien agreement and a new lien period may be granted when the client applies in California.

Example Example An applicant applies for CalWORKs in California in May. The applicant owns excess real property in Washington. The applicant tells the EW that she signed an excess property lien in Washington against the property she still holds and received aid for six months in the previous year. The applicant may sign a new lien agreement in this state against the same property for a new nine month period.

Note: For this section the definition of “sold” is when escrow has closed.

Applicant/Recipient Responsibility

As a condition of receiving cash assistance and BEFORE the EW grants aid, the applicant/recipient must take the following steps:

GRANT THE COUNTY A LIEN, which is payable to the county when the property is sold, against the property. An “Agreement to Reimburse” (SC 355), is used to record the lien. The lien is binding on the applicant/recipient, his/her heirs, executors, administrators and assignees.
AGREE IN WRITING to begin immediately to make a good faith effort to sell the property. The “Agreement to Sell Property” (CA 82), must be used as the agreement document.
MAKE A “GOOD-FAITH EFFORT” to sell the property by:
1. Listing the property for sale with a licensed real estate broker at the property's approximate fair market value and be willing to negotiate the terms of the sale with potential buyers. OR
2. Make an individual effort to sell the property which must include ALL of the following:
  1. Note: Advertise once a week in at least one publication of general circulation that the property is for sale. Once the client becomes resource eligible it will no longer be required that this person use out of pocket expenditures to market the property, but they must continue to list the property with the licensed broker.
  2. Place a “FOR SALE” sign on the property. The sign must be visible from the street, whenever possible.
  3. Offer the property for sale at its approximate fair market value. The fair market value is the client's choice of:
    1. The assessed value of the property, OR
    2. The valuation of the market value of the property from a licensed real estate broker, obtained by the applicant/recipient.
3. If the property is located in a remote area and it is impossible or impractical to obtain a valuation and the client believes that the assessed value is too high or too low, the county and the client may agree on the mar- ket value based upon other available information.
Be willing to negotiate the terms of the sale with potential buyers and respond to ALL reasonable inquiries about the property.
Verify a “good faith effort” to sell the property by:
1. Furnishing his/her EW with a copy of the contract with the licensed real estate broker, OR
2. Cooperating with the county if he/she chooses to make an individual effort to sell the property.

Reminder: If at anytime, prior to the end of the nine month period, the client elects not to sell the property, that property is no longer exempt and must be counted in the resource limit.

Resource Eligible

When an AU becomes resource eligible, it will no longer be required that this person use out of pocket expenditures to market the property but they must continue to list the property with the licensed broker. Resource eligibility exists when the equity value of the real property plus all countable resources is less than the property limit. When determining the equity value of real property, the EW must allow all encumbrances.

End of Nine-Month Period

If the client has not disposed of the property at the end of the nine-month period, the EW must insure that the case is discontinued in a timely manner.

Agency Procedures

When it has been determined that a client must complete the process to establish a lien on real property, these procedures must be followed:

STAGE	WHO	ACTION
1.	EW	Complete an “Agreement to Reimburse” (SC 355). Enter the address, legal description (Parcel Number) and all co-owners of the property , appearing on the County Assessor's Property Tax Statement. Route the original, yellow, and pink carbons to Collections at 333 W. Julian Street, Attn: Reimbursement Desk. Establish case, once eligibility cleared. Create a Reminder due in eight (8) months. Image a copy of the SC 355 into the case.
2.	Collections	Establish a control on the SC 355 and “Excess Real Property” (SC 1366). Send the SC 355 to the County Recorder's Office.
3.	County Recorder's Office	Record the lien. Return the copy of the SC 355 to the continuing EW.
4.	Unit Clerk	Document the lien in the Journal Detail page of CalSAWS.
5.	EW	Image the copy of the SC 355 into the case. Determine if the combined value of ALL real and personal property continues to exceed the property limit for the AU, at the end of the 8th month. If it does, discontinue cash aid effective the end of the ninth (9th) month and send a timely NOA. Determine the amount of aid to be repaid when notified of the sale of the property. Refer toDetermining Repayable Aid from Sale of Excess Real Property [EAS 42-213.12]. Complete the “Excess Real Property” (SC 1366) when the cash aid program is closed or when the property is sold. Send the original to Collections, 333 W. Julian St., Attn: Reimbursement Desk. Image a copy of the SC 355 into case. Send a copy to the client.