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The equity value is equal to the principal balance remaining to be paid on the contract, which is referred to as a land contract or installment contract. Example: A Refugee applicant contracted to sell a piece of real estate for $15,000. To date, $8700 has been paid on the principal. The remainder, $6300, is considered a resource to the applicant. The equity value of a contract is to be considered a resource. Except when the contract contains a clause that prohibits the owner from selling or transferring the contract. In such an instance, the equity value is exempt. However, the portion of the periodic payment that represents payment toward the principal is counted as a resource. 2615.55.15 LAND SALES CONTRACT (MED 1, 4) Land contracts or property agreements must meet the following criteria: • The repayment term must be actuarially sound (it cannot be set up in terms which exceed the applicant/recipient’s life expectancy). See the Life Expectancy Table included at the end of section 2640.10.25.10. • Payments must be made in equal amounts during the term with no deferral of payments and no balloon payments. • 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. If the criteria above are not met, the land contract or property agreement must be treated as a prohibited transfer of resources. Ineligibility periods must be determined and applied. 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 LTC admission, whichever is later. In the case of HCBS, the balance to be used is the amount as of the date of the waiver approval. Income and resources in the Medicaid budget for the seller should be handled as below. For all land contracts and property agreements: • The down payment is counted as a resource • Only the interest portion of the payment/s is counted as income40 • It is considered a conversion of resources (see IHCPPM 2605.30.00). For land contracts or property agreements meeting the criteria listed in this section: • The principal portion of payments/s is not income