Utilization

All other real property must be utilized in order to be exempt unless the net market value, when added to the net market value of other nonexempt property, does not exceed the property reserve limit for the MFBU.

Property is considered utilized if the owner is receiving net yearly income from the property of at least 6% of its net market value.

CalSAWS will determine utilization, however, the EW can complete the MC 176 P, Property Worksheet, Section I, to determine utilization during a system outage.

Note: If a person owns more than one piece of property which are subject to utilization requirements, the combined net market value of all the property may be used in determining if the utilization requirements are met. Each piece does not need to be producing income of 6% individually.

ExampleExampleClient owns 2 pieces of property. One is producing income of 4% of NMV. The second piece of property is producing income which equals 2% NMV of both pieces of property. The utilization requirements are met because they total 6% (or more). 

Other real property is being utilized if it has been sold for FMV, or the sale is in escrow and there is an attempt to close the sale.

Other real property listed for sale is exempt from utilization requirements as long as all of the requirements for it to be considered otherwise unavailable are being met. Refer to Exemption/Unavailability of ORP. 

Utilization requirements begin whenever:

• An applicant who is a member of an MFBU, with other real property included in the property reserve of the MFBU that is not being utilized, becomes eligible.
• The other real property that has been utilized is no longer utilized.
• The net market value of ORP, when added to the NMV of other nonexempt property no longer falls within the property limits for the MFBU.
• The entire NMV of property not utilized is included in the property reserve on the first of the month following the last month of the utilization period.

Determine Ownership Share and Amount to Be Utilized

The owner is the person who holds legal title. Title may be sole and separate, joint or in common. If the client is the sole owner of the item of property, the entire item is subject to utilization. If the client shares ownership with other individuals, only the client's portion of the property is subject to utilization.

ExampleExampleA client has 1/3 interest in an apartment building that he does not live in. Therefore 1/3 of the Net Market Value of the apartment building is subject to utilization.

Related Topics

Other Real Property (ORP)

Other Real Property Definitions

Time Limits for Utilization