So I would like to purchase my grandmother's home that has a Medicaid lien on it. The home's value has drastically decreased due to the condition. Would I be able to purchase the home for the current value which is less than the lien value? How do I go about doing this?
But let’s take a few steps back, if she was on LTC NH Medicaid someone in the family has been paying property costs as her monthly income has been a copay to NH. Who all pays /paid house stuff?
Whats that figure?
If she’s alive, does her DPOA allow full financials, like 2 sell property?
If she’s dead, has the old DPOA gotten a MERP questionnaire from the state or it’s outside contractor? Did it get responded to? Has whomever named in her will to be executor started dealing with her estate? Whomever is named executor as per Grans will, has to do some type of action (sm estate affidavit, a Muniment or full-on probate) in probate court to get authority (like Letters Testamentary) to deal with settling her estate, selling house, having executor fees / expenses paid, dealing with claims. If no will, lots stickier. Stuff like this isn’t a DIY for most of us. So has anyone spoken with probate atty yet? Or filed will at courthouse?
Medicaid, thru MERP system, is required (by the feds) to attempt a recovery of costs paid by Medicaid. If your in a TiFRA state, lien can be placed once on LTC Medicaid. If your in a nonTifra state, it’s an after death lien or claim. Now All states have exemptions and Exclusions to MERP. Whomever are the heirs as per her will, need to look into this to see which ones they can file. Also whoever paid property taxes & insurance on her empty house while she was in the NH, need to get all that together & file it as an exclusion to MERP &/or file as their own claim (debt) against the estate.
Medicaid is an unsecured debt (unlike a mortgage which is secured). If your state has it that Debts against an estate are placed into categories for priority, where MERP fits can make a big difference imho as to how involved all this might just be. Like Tx is a Level of Claim by Class for probate & MERP is class 7, so all in 1-6 are priority before 7. But none of this is really DIY, you need an atty who understands MERP.
Regarding FMV, if house value is whack as compared to current tax assessor bill, you can get it appraised to get a more realistic value. If it has decades of delayed maintenance or has issues with the majors - roof, foundation, electric, plumbing - I’d suggest you get it inspected first & the inspection report given to the appraiser. Both the inspector & appraiser need to be state licensed. They put a # & seal on their reports and it is legal. It can be submitted to Medicaid. It can be entered into probate as to value of estates asset. If it’s significantly less than tax assessor, it is what it is. It has a new FMV.
Realtor comps are helpful but are based on recent sales. If house is in area of big renovations or tear downs, comps are going to be way off. You need to get it appraised imo.
To buy it, You will need to have either the cash outright or be able to get a mortgage for the appraised value. Probate won’t allow title transfer on an asset being sold unless its in full, in my experience. No rent to own or buy in installments. The $ becomes an asset placed in “Estate Of” bank account that’s used to settle all claims against the estate. If MERP files a claim, then they are in line to be paid however your state has claimants prioritized.
if gran is still alive, then you’ll have to put together a proposal to buy the house along with documentation as to its FMV that the dpoa submits to gran caseworker. There was an investor on this site few months back who bought house from a lady on Medicaid. He got subs he works with to do estimates on all repairs needed & used this to essentially put in all cash bid to buy. Medicaid approved it; took abt 2 months. Realize if gran’s alive & sells house, $ is all hers, so she’s ineligible for Medicaid as no longer poor. She cannot gift any $. $ used to private pay NH.
If your in a TIFRA state, those that want to can allow a lien to be placed onto property when any Medicaid over age 55 starts. It’s seems to be a somewhat subterranean lein. Like it might not get recorded into the easy to find records filed at the courthouse, like a Warranty Deed is. It seems to be put into land evidence records.... for a lot of places land evidence is it’s own division; it’s where right of way or public egress stuff goes. Like part of your property actually is RoW for railroad side area or where phone co has switching boxes. Title companies do the deep searches and their the ones who find the Medicaid lien. I imagine that if it’s an elderly homeowner, title co know to look for the lien.
Anyways subterranean lein is there. But one of the issues with Medicaid doing this is the lein does not have a exact $ amount when lein is placed. It’s a lien of Medicaids interest. For most states, neither the recipient nor their DPOA get an actual Medicaid tally of costs each month. Medicaid doesn’t seem to do what CMS Medicare does in that they mail out statements of services done & vendors paid. My mom got a forest of CMS MediCARE statements. But from Medicaid, nothing. Really unless business office of the NH gives you a summary of what Medicaid paid them (the NH), your not going to know the amount, The Nh isn’t required to share that info with you as it’s not a summary of anything your elder paid either. Sigh.
So actual amount a NH resident may owe Medicaid is a mystery & family is gobsmacked when they find theres a lien on house when they go to sell it or when they get - from Medicaid or their outside contractor for MERP - a post death NOI (notice of Intent) with a $ amount supposedly owed.
Then add into this #4 - what your states administrative code for Medicaid requires for assets changes for Medicaid recipients. The asset increase makes them ineligible for Medicaid but... some states allow the elder to keep the $ but all must go to private pay the facility for their care. Others seem to allow them keep the $ but ok to buy a preneed funeral policy and then everything else pays the NH. Some states require reinbursement to date of Medicaid costs and what they do with the rest of the $ Medicaid doesn’t care. But if they get impoverished again and apply for Medicaid again if there’s been any gifting, thats a problem for eligibility. Thats what I meant by “no gifting”.
On what happen if sale is less than lien, most of posts on AC for predeath, is that caseworker / Medicaid has to approve sale so a release can be done to transfer title. For post death, it’s in my experience, going to depend on probate laws & your judge as to how claims dealt with.
If OP needs mortgage, id try to get tentative ok by Medicaid for FMV or appraisal to take to lender. May need to go conventional (yeah, horrors). The investor who bought old ladies place, if I’m remembering right, did all cash time limited bid / proposal to Medicaid, which they approved.
If gran died intestate, that’s sticky, as it seems intestate deaths fall to the state to have control over. Grans heirs would need to have an atty file a Lineal Heirship action in probate court to show why it moves to them instead f the state. I don’t know if the state could sell a property before Lineal finalized.