Can Medicaid put a lien on a property I have under contract?

Question

Here is my situation. I have a property under contract as of 3 days ago in Texas. The seller is the daughter of the owner, with power of attorny, and the owner is in a nursing home with dementia. The seller has just informed us that Medicaid, who is paying for the owners elderly care, is demanding an appraisal on the property, and will not allow it to be sold under market value. Obviously we do not want an appraisal, and the property is already under contract. Does Medicaid have the power to legally enforce? And by closing this deal without an appraisal, are we at risk for any of the following, and are there any ways around this?

1. Violation of any elderly abuse laws

2. Medicaid putting a lien on the property after the deal closes

3. Medicaid opening a case against us

4. Medicaid opening a case against the seller

5. Seller losing Medicaid support and causing problems for the family

Thank you all for your kind consideration and time in addressing this unique issue.

1. Violation of any elderly abuse laws

2. Medicaid putting a lien on the property after the deal closes

3. Medicaid opening a case against us

4. Medicaid opening a case against the seller

5. Seller losing Medicaid support and causing problems for the family

Thank you all for your kind consideration and time in addressing this unique issue.

Rajeev Kotyan · Answer

@Penny Clark: Thanks for the links... very helpful to all...

Penny Clark · Answer

Glad to have been some help and good luck in your next venture!

Cash Lawless · Answer

@Rajeev Kotyan Thanks so much for that insightful response. Very much appreciated and that was very helpful. @Penny Clark Thank you as well for the link! Definitely storing this in the resources bookmarks.

After all was said and done, we dropped the deal due to the daughter getting drunk with her sisters and intimating we were trying to pull a fast one. The risk for legal headaches vs. the reward just didn't make sense on this deal. But now that I know more about the medicaid laws, We can handle these things up front and not on the back end in the future.

Thanks again guys! -Cash

Penny Clark · Answer

@Cash Lawless, I know in Cali if you own property and go into a nursing home and it is paid by Medi-Cal, the government has a right to force the sale at market value. It would be a shame for all to lose this deal. Here is a FAQ link about Medicaid that applies to the state of Texas. It should provide a good start in getting answers to your questions. Also you may want to consider consulting with an attorney who specializes in real estate and estate planning. Good luck to you!

https://www.dads.state.tx.us/services/estate_recovery/faqs.html

Rajeev Kotyan · Answer

@Cash Lawless: Getting Medicaid assistance for an individual, the government agency receives its monies from the taxpayer (i.e. all of us). The agency has a responsibility to make sure that the individual getting the assistance has truly depleted all their assets (or close to all their assets). Simply selling off the property at below market value to show that one has depleted their assets, the agency can open a case against the individual (even after the sale of the asset) and they may stand the chance of loosing their assistance.

In order to be considered for Medicaid assistance, one has to disclose all the assets and liabilities, and one of the items is the house. When the owner tries to sell the property, Medicaid can enforce formal appraisal of the property, so as to make sure that the assistance application stands.

Medicaid could notify the local state agency for elder abuse by you (but generally they simply handle such cases themselves).

The agency can put a lien on the property for assistance that they are owed, but only on the existing owner of the property, and sometimes that can be tricky especially if you are purchasing from the elderly on Medicaid assistance, as the documents may get stuck in transit to recording, and may get recorded just after your purchase (but is dated before your purchase).

As a Buyer you can make your case of a lower price based on couple of factors, your own formal appraisal and time to sell the property based on the location of the property.

Best to work with an attorney who can check with various government agencies as it pertains to elderly to make sure you have clear rights to title.