Section 405 IAC 2-3-12 - Contract sale of real property; calculation as incomeAuthority: IC 12-15-1-10; IC 12-15-1-15; IC 12-15-21-2
Affected: IC 12-13-7-3; IC 12-15
Sec. 12.
(a) A property agreement is a pledge of security of a property for the payment of a debt or the performance of some other obligation within a specified period of time. A land contract is a property agreement whereby there is a contract for the sale of real estate in which the seller of the real estate retains legal title to the real estate until the total contract price is paid by the buyer. Pursuant to the Deficit Reduction Act of 2005, land contracts or property agreements must meet the following criteria: (1) The repayment term must be actuarially sound in that it cannot be set up in terms that exceed the applicant's/member's life expectancy.(2) Payment must be made in equal amounts during the term with no deferral of payment and no balloon payment.(3) The land contract or property agreement must prohibit the cancellation of the balance upon the death of the lender. If a balance remains upon the death of the lender, it must be designated to the estate of the deceased in order to be considered valid.(b) For all land contracts and property agreements meeting the criteria listed in subsection (a):(1) any down payment shall be counted as a resource;(2) the interest portion of the payment shall be counted as income pursuant to 20 CFR 416.1103(f);(3) the principal portion of the payment shall not be considered income;(4) amounts paid towards the principal shall be considered a countable resource as of the first of the month after the payment is received;(5) principal amounts may not be deducted from bank balances or reports of cash on hand, or put into a Miller Trust;(6) the property itself is a [sic] not a countable resource because the seller cannot legally convert it to cash while it is encumbered by the non-negotiable agreement; and(7) the property agreement or promissory note has an assumed resource value based on the outstanding principal balance unless the individual furnishes evidence that it has a lower cash value.(c) If the criteria in subsection (a) are not met, a non-negotiable land contract or property agreement must be treated as a prohibited transfer of resources in accordance with the following requirements: (1) Ineligibility periods shall be determined and applied towards the applicant or member.(2) The value of the contract to be considered an improper transfer will be the outstanding balance due as of the date of the individual's application for Medicaid or date of admission for long term care, whichever is later.(3) In the case of home and community based waiver services, the balance to be used is the amount as of the date of the cost comparison budget approval.(d) For land contracts that do not meet the criteria in subsection (a), the outstanding principal on the negotiable agreement is considered a countable resource pursuant to 42 U.S.C. 1396p.Office of the Secretary of Family and Social Services; 405 IAC 2-3-12; filed Mar 1, 1984, 2:33 pm: 7 IR 1043, effApr 1, 1984; readopted filed Jun 27, 2001, 9:40 a.m.: 24 IR 3822; readopted filed Sep 19, 2007, 12:16 p.m.: 20071010-IR-405070311RFA; readopted filed Oct 28, 2013, 3:18 p.m.: 20131127-IR-405130241RFAReadopted filed 11/13/2019, 11:54 a.m.: 20191211-IR-405190487RFAFiled 6/11/2021, 2:35 p.m.: 20210707-IR-405190602FRA Transferred from the Division of Family and Children ( 470 IAC 9.1-3-14) to the Office of the Secretary of Family and Social Services ( 405 IAC 2-3-12) by P.L. 9-1991, SECTION 131, effective January 1, 1992.