I'm speaking with the son (POA) of someone in home care (Medicaid). He would like to sell the home but is afraid it will take away coverage of his parent. At the same time, they are unable to maintain the property and it is going to be forclosed due to code violations. Is there any way to help them out and purchase the property without negatively impacting their finances/Medicaid coverage? Seller financing etc...also once the property does sell in foreclosure and the lien is paid, doesn't the remaining money go back the owner...which would still impact the parents Medicaid?
Here’s the issue for those on LTC Medicaid (like in NH) & their families: LTC Medicaid by & large allows them to continue to own their home as exempt asset for thier lifetime; BUT Medicaid requires them to do basically a copay of all monthly income (like thier SS$); SO the mom has no $ to pay any property costs; IF she keeps the place, family have to front all costs from day 1 of NH till beyond the grave on a property not in their name; THEN after death, Medicaid is required to attempt a recovery of all costs paid from any assets of the deceased. House becomes an asset of her estate. Now just how MERP runs depends on your states laws for probate & property rights and it’s administrative code. There are all sorts of exemptions and exclusions to MERP that family can file too. But the biggie is family has to have time, wallet & sense of humor to keep an empty house from now till mom dies & thru probate and file exemptions with documentation if need be. It can be done. Most don’t so house gets sold, seems to be at the 6 mo point as one of the kids is so over paying & doing while the other sibs do zero. Sale $ takes her over Medicaid max. It’s her home; sale in county database & goes into state system. Medicaid will know. She becomes ineligible for Medicaid & so now private pay at the NH.
& Medicaid has a tally of costs paid for her.
NH Medicaid bill the mom incurs is by a daily room&board rate. Varies by state. Most pay abt $195 day. So 2 years NH maybe 142k possible lien on property by Medicaid. If your in a TIFRA state, lien exists on home from day 1 of NH stay. It’s a rather subterranean lien, in that its not recorded at courthouse but shows up on a title search. On nonTifra states, may not come up on initial search. But if your getting lending or having it sold via Warranty Deed, it will surface eventually & places clouds on title.
She can sell the place. Assuming she’s got legal already done that allows her DPOA to do these type of financials on her behalf. Property must be sold at FMV. If the assessor value is whack, an inspection and appraisal can be done to establish why legitimately is lower value. Not Realtor comps; needs licensed paperwork with appraiser # & seals. As Medicaid is involved, my understanding is her caseworker will need to be told of the anticipated sale, provided a written Offer and who is holding the escrow $ and the sale price allowed by Medicaid for it to actually go to Act of Sale. I’d plan on this being semi-glacial in timing.
The son actually said “foreclosure”???
Foreclosure usually on home with mortgages. Is there still a mortgage?; or - horrors- a Reverse Mortgage on the place?
Could it actually be a tax lien on the place or a blight / code lien or judgement on the property instead? Tax lien is going to go up for tax sale annually. I’d look to see if it’s already been thru a tax sale and where it stands for a redemption or has been redeemed. Blight is usually city / county liens with interest placed on property. Those cloud the title but usually easily resolved. Like lien paid off before Act of Sale. Rare for these to cause property to be sold unless ROW/ED issues happening. Is it actually it’s tax / blight liens on house?
The son needs to realize if he pays anything on the place, his mom cannot easily repay or reimburse the $. Medicaid considers it gifting and places a penalty on her for it. He cannot keep any of the $ at all.
Personally if you really want it, & If you have limited $ but time, wait it out to go buy at tax sale, then do Quiet Title action to finally get clean title.... but House does continue to have delayed maintenance tho.
If you need to buy cheap, reno & flip in weeks, find another property.
If you have a wallet & there's mortgage, I’d buy it at the foreclosure sale. Bank will do sale at courthouse w/in few months of last payment.
ANY property sold must be sold for fair market value and the money will go to the owner in LTC. Putting them over the asset limit for Medicaid. This is not a do it yourself and ask for forgiveness later. A certified elder law attorney and the social worker should definitely be involved to ensure that all the rules are followed. If not it could cost them the Medicaid coverage.
I won't say that property can't be foreclosed b/c of code violations, but that infers the city, township or other municipal entity (which can issue code violations) is the entity instituting the foreclosure. Typically foreclosures are initiated by mortgagees (lenders). However, cities can foreclose for unpaid real property tax liens.
Do you know what code violations exist that are grounds for the foreclosure?
As to what happens after a foreclosure, only if the foreclosure price is greater than the amount of indebtedness, plus interest and foreclosure costs, and any other fees, would there be any funds that could be returned to the title holder of record.
My experience has been with commercial foreclosures, and I don't recall the specific amounts, but my recollection is that lenders foreclose for outstanding balances, unpaid monthly payments and/or other liens (taxes, e.g.).
In other words, I'm not sure lenders can foreclose for more than is actually owed, which would not provide anything over and above to return to the owners.
The owner loses rights except those established by statute for redemptions, by which the owner could repurchase the property by paying all the costs of foreclosure. The time to do this varies; it's 6 months in some states and 12 in others, but that's based on foreclosure statutes of several years ago. If I remember correctly, title is in fact transferred to the foreclosing entity once the foreclosure sale has taken place.
So, I don't see any way the owner could recover the property w/o paying ALL the costs of the foreclosure, and redeeming the property in the statutorily allowed time framework.
In other words, I'm not sure lenders can foreclose for more than is actually owed, which would not provide anything over and above to return to the owners.
I can't speak to any Medicaid issues; I'm not at all knowledgeable of those issues.
If you do get legal help, you'd need not only someone knowledgeable of Medicaid, but also someone highly skilled in residential foreclosures.
It's very thoughtful of you to want to help out this family, but once you buy and your name is on the title, the house is no longer available as an asset for Medicaid recovery. There might be some arcane and infrequently used mechanisms that a highly qualified real estate attorney might know of though.
If so, I so doubt Medicaid will ever allow that.
I know for TX LTC Medicaid if the property is placed on the market, the state requires it to be listed MLS and have a licensed TX Realtor as the agent.
No FSBO nonsense.
As a Realtor is involved, theres going to be a Title company and escrow account established for the earnest $ and Act of Sale $. Everything totally legit, title search, notarized, recorded, etc.
If there is a mortgage (regular mortgage not Reverse), the elder might can file for a waiver of some of their required copay to the NH to instead be used to pay mortgage. TX Medicaid does this. It’s time limited, like 6 mos. Elder is expected to sell that sucker within the 6 mo waiver period. Again need Realtor & MLS listing. It makes sense for state to do this as they would rather the elder sell the home now use the $ to private pay for care and not have it go to foreclosure.
If it’s goes to foreclosure, it’s like Garden Artist wrote..... elder may not get $ from the sale.
Really look at the last tax assessor bill on the place. That’s the figure the state is going to want it sold at and paid for completely in full at the Act of Sale. So either you have the certified funds to pay in full or get a mortgage from your bank. No sold by installment agreement between mom & you nonsense.
If Sonny does this, ignores Medicaid, and you buy it for cheap, for your part there’s going to be clouds on the title. Clouds can be dealt with but will limit how you can sell it later on. You likely won’t be able to ever sell it FHA (90/95% of market) or via a Warranty Deed (so no buyers who need a bank mortgage).
For Sonny’s part, MedicAID will find out and it can get ugly. At my moms 1st NH lady across the hall from her Son did this. The sale is recorded in co database and Medicaid made the mom ineligible and clawbacked its payments to the NH too. So his mom owed months of private pay. NH tried to get him to pay. He refused. He was imho a azz, real demanding POs type. There was always a huddle by her room with billing, staff etc when the son was visiting. NH contacted APS and they got an emergency ward of the state guardianship for the mom. The guardian moved the lady to another NH. Sonny was not informed. One day I went to visit my mom & He was in the lobby ranting... the NH called the police too. I was told he was arrested for trespassing. FUN! The NH turned the bill in his name over to collections. More fun.
His mom was real sweet too. I cannot imagine how beyond horrific all this was for her. My mom was visibly upset for her & by the commotion.