Time Limits for Utilization

The individual must be allowed six months to meet utilization requirements. The six month period begins on the first of the month following issuance of a notice of action regarding utilization requirements. Once a utilization period has begun, if the individual becomes ineligible for MC before it expires, the utilization period stops. The remainder of the utilization period must be applied if the client reapplies and the property is still not being utilized, unless the individual verifies that the property was utilized at any time during the month(s) he/she was not on MC, a new utilization period must be allowed.

The utilization period can be extended for a maximum of one year for good cause. Good cause can be established only when the individual has made a good faith effort to meet utilization requirements and is unable to do so because of circumstances beyond his/her control, including, but not limited to:

Death of a part owner of the property and inability or refusal by the administrator, executor of the estate, or other responsible person to meet the utilization requirements.
Prolonged illness which causes the individual to be hospitalized or home bound during the utilization period, which renders him/her unable to take the necessary actions or to arrange for an agent to do so.

If the utilization requirements can only be met by sale of the property, the utilization period can be extended for as long as the property is listed for sale and all requirements are being met for it to be considered unavailable.

The client may have his/her property reassessed during the utilization period using the reassessed value to determine utilization. A reassessment must not affect the length of the utilization period.

Examples of Other Real Property (ORP) Utilization

Value of ORP is Within Property Limits

A couple owns undeveloped land with an assessed value of $650,000. However, they owe $648,000 on the property; therefore, the net market value is $2,000. They also have $700 in a joint checking account. Since the value of the ORP and their checking account is less than their property limit ($3,000), the house is not subject to utilization requirements.

Value of ORP is Over Property Limits, ORP Must Be Utilized

A couple lives in their own home and have another home which is not being rented. The assessed value of the second house is $750,000 and $720,000 is still owed. The net market value of the ORP is $30,000. The couple also has $2,000 in a savings account. Since the value of the ORP and their savings account is more than their property limit ($3,000), the house is subject to utilization requirements.

Deed of Trust, Utilization Met

A couple has a deed of trust from the sale of their previous home. Its net market value is $5,000. Since the value of deed is more than their property limit ($3,000), the deed is subject to utilization requirements. The value of the deed is not included in the property reserve if utilization requirements are met.

Value of ORP over $6,000, Utilization Requirements Met

When the NMV of other real property is over $6,000, only the first $6,000 may be exempt if utilization requirements are being met. Any amount of the NMV in excess of $6,000 is included in the property reserve.

A couple owns a house that is being rented. The net market value of the house is $7,000. They have $1,500 in the bank. The property limit for 2 is $3,000.

If they meet the utilization requirements, the first $6,000 on the property is exempt. The balance of its net market value ($1,000) is included in their property reserve, together with the $1,500 in their bank account.

Excess ORP Over $6,000, Not Eligible

A couple owns land with an assessed value of $160,000. They owe $140,000; therefore, the net market value is $20,000. Only $6,000 is exempt. The remaining $14,000 is included in their property reserve. They are ineligible unless they make a bona fide effort to sell the property for its fair market value (appraised value not the assessed value). They are eligible and the property will be considered unavailable if they meet all requirements.

ORP Value Under $6,000, Utilization Not Met

A couple has a second home with a net market value of $3,500. A relative residing in the home, is paying $200 per month rent. Actual expenses include:

Taxes	$1,000 annually
Interest	1,200 annually
Insurance	300 annually
Water and Garbage	500 annually (paid by owner)
Gardening service	30 monthly (paid by owner)

No other expenses are being paid by the owner.