Do any fellow Mass RE investors have experience dealing with properties where the purchase of the property may be subject to a medicaid lien.
I have run into two situations as of late where the title holders were racking up medicaid bills. Any tips or tricks as to what to watch out for and how much these liens can effect the owners equity?
I do not understand how medicaid works for the most part.
If a homeowner needs to use medicaid benefits for lengthy hospital stays or for being institutionalized, medicaid can place a lien on the property or other assets. The lien needs to be satisfied with the proceeds of the home sale.
It's only an issue for a buyer if the medicaid bill hasn't been settled yet. My neighbor just got a settlement payoff figure for being in a home almost a year ago. If settlement isn't an issue, then the proceeds will pay off the lien at closing.
Thanks for replying. Do you know if these liens can affect new owners? Lets say the person goes into a nursing home in 2012 but wants to sell her house in 2014. She has accumulated 150k worth of medicaid expenses Her house is only worth 130k and she has 130k of equity in the house. Does medicaid forgive the 20k or is this passed on to the next owner?
Also who does the policing for medicaid to make sure the home is being sold at fair market value? Do they hire appraisers?
Medicaid doesn't get involved with the house itself. It's just a debt that has to be settled. if the person passed away, then the estate has to settle with medicaid. If it just a large hospital bill, each state will have various rules about how medicaid can recover what's due.
@Christopher Phillips It sounds like every situation is different. In the situation I have now the seller wants to give the property to a buyer for a nominal amount. The buyer would then settle the liens and pay the seller a certain amount of installments over time as cash.
The seller would remain in nursing care, until the buyer could develop the land, saving one of the new homes for her.
The seller can’t unload the property without a clean title. It’s their lien, they need to settle it.
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