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 Assistance Unit (AU) demonstrates a good faith effort to sell the property. Refer to Applicant/Recipient Responsibility for the definition of “good faith effort.”

The Social Services Benefits Specialist (SSBS) 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 12 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 Lien Agreement (CW 81) is not required.

Example Example An applicant signs an excess property lien and is eligible for CalWORKs beginning in January. On April 14th, a lawsuit is filed by creditors with a lien against the property which prohibits its sale. The nine months stop 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 SSBS 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 SSBS grants aid, the applicant/recipient must take the following steps:

Grant the county a lien against the property, which is payable to the county when the property is sold. A CW 81 is used to record the lien. The lien is binding on the applicant/recipient, their heirs, executors, administrators, and assignees.
Agree in writing to begin immediately to make a good faith effort to sell the property. The CW 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 (FMV) 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. Advertise once a week in at least one publication of general circulation that the property is for sale.
  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 FMV. The FMV 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. Exception: 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 market value based upon other available information.
3. 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 the SSBS with a copy of the contract with the licensed real estate broker, or
2. Cooperating with the county if they choose to make an individual effort to sell the property.

Reminder: If at any time 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

Once the AU becomes resource eligible, the AU will no longer be required to use out-of-pocket expenditures to market the property, but the AU must continue to list the property with a licensed real estate 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 SSBS 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 SSBS must ensure 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.	Client	Complete the CW 81. Enter the address, legal description (Parcel Number), and all co-owners of the property appearing on the County Assessor's Property Tax Statement.
2.	SSBS	Send the CW 81 to Imaging. Forward the CW 81 to Collections at 333 W. Julian Street, Attn: Reimbursement Desk. Establish the case once eligibility is cleared. Create a reminder due in eight (8) months.
3.	Collections	Establish a control on the CW 81 and Excess Real Property (SCD 1366). Send the CW 81 to the County Recorder's Office.
4.	County Recorder's Office	Record the lien. Return the copy of the CW 81 to the SSBS.
5.	Unit Clerk	Document the lien in the Journal Detail page of CalSAWS.
6.	SSBS	Send the CW 81 to Imaging. 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 Notice of Action (NOA). Determine the amount of aid to be repaid when notified of the sale of the property. Refer to Determining Repayable Aid from Sale of Excess Real Property. Complete the SCD 1366 when the cash aid program is closed or when the property is sold. Send the original to Collections at 333 W. Julian Street, Attn: Reimbursement Desk. Send a copy to the client.