Temporary Assistance/Case Management

0205.005.15.15 Determine Equity in Excess Acreage

Most often, a home and adjoining land are bought with one loan for the entire property.  When determining a family’s equity in land exceeding 40 acres, and only one loan exists for the entire property, determine the proportionate value of the excess acreage versus the entire property (home and 40 acres plus excess acreage).  Apply that percentage to debt to determine the proportionate share of debt to consider against the excess acreage.  The value of the excess acreage less proportionate debt equals equity in excess acreage.

EXAMPLE:  A family is buying a home and 55 acres.  The home and 40 acres are valued at $45,000.  The excess 15 acres are valued at $6,000.  The outstanding debt on the entire property is $30,000.  The proportionate value of excess property to total property is $6,000 divided by $51,000 equaling 11.8 percent.  11.8 percent multiplied by $30,000 equals $3,540, the proportionate debt.  Equity in excess property is the $6,000 value less $3,540 debt equaling $2,460.  Equity of $2,460 in the excess property exceeds the $1,000 resource maximum allowed for applicants.

If an applicant is just slightly over the $1,000 maximum, contact the bank or institution holding the loan to determine how much payment it expects from the outstanding loan if the excess property is sold.  Consider the bank’s or institution’s statement in making the final determination.