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Texas medicaid recipient has a house with a mortgage of $28K and the house is only valued from $30 to $50. She will never go back to house to live on her own. There are no heirs that can afford to buy the property nor do they want it. Can the house be sold now before she passes away? There will only be minimal left after the mortgage loan is paid to the bank, along with closing costs and repairs which would need to be done to be sold.

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I hoped you would be along, igloo. It is good to have someone on the group that knows so much about MERP. It is never easy when Medicaid gets involved.
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Part 2…..having a problem at closing is a issue which you want to avoid.

You need to be frank with the Realtor that there exists the possibility of a state claim on the property. Ask if they have ever dealt with a property that has a MERP claim or have ever dealt with HMS (they are the outside contractor for TX for all Medicaid recovery now and they approach it as a debt collector).

When they are dead and you are dealing with MERP an "Authorization and MERP Certification - July, 2009 edition" form is done in order for the probate judge to distribute the house as per the will. You also need this done to have a clear title and title insurance issued. It's a simple 1 page form. But this is how it works when their dead. This is what is in my future…..

Your situation is different and you need to find out how to do the indemnity so that you can go to closing. There is a really great MERP issues attorney in your area - Randy Drewitt and he is in big beautiful Beaumont. If all this is really overwhelming you, I'd suggest you contact his office to see who in Baytown can do this correctly so there is no glitches in the sale. Good luck.
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The house can be sold, but there are some things you will need to do to ensure that there is not a glitch at the act of sale & closing due to MERP (Medicaid Estate Recovery). My mom is in a NH in TX and still has her home and will go to her grave owning it so I try to keep up will all things MERP. This is going to be long….

When you apply for Texas Medicaid, there will be an "Acknowledgement of MERP" statement in the application. The applicant or their DPOA does not need to sign it in order for it to be in force either. As long as they applied for Medicaid after 2006, MERP is an option for the state to persue. What MERP does is enable the state to place a claim against the estate on the property to recoup the state's cost for Medicaid paid to the NH.MERP is geared to be put into play after death and via probate court - that is how the law is set up. This will be my situation but your's is different in that the sale will be before she dies but the possibility of the claim still exists which could affect being able to sell the property now.

Texas law does not allow for a lien to be placed on homeowners residence - only the mortgage holder, a workman's lien or IRS can do a property lein - but instead MERP is a claim against the property and the future estate (estate as in probate).
A claim is very different than a lien. As it is not a traditional lein, it won't show up in the quick initial check on the property. But it probably will show up when title insurance is needed for the sale by the buyer. Most property is bought via a mortgage and mortgage companies want mortgage & title insurance done and the property sold via a warranty deed. The MERP claim on the property could surface and the warranty deed would be invalid because of MERP. Big problem for you as the new property owner can come to you for any mortgage or ownership issues later on that surface.

This is from TRGC Stargazer Summer 2009 (they are the big clearing house for title insurance) "If the property is being offered for a real estate transaction by an estate where decedent was over 55 at the time of death, the closer is required to obtain an affidavit and indemnity from the persons offering title that no Medicaid funds were received by decedent and that no notice of claim has been received by them or someone known to them from either the Texas Department of Health and Human Services, the Texas Department of Aging and Disability Services, or their representative, Health Management Services. So long as the persons offering title can swear to this and offer indemnity against this obligation, it is Title Resources’ opinion that the title agent has met the requirement to make reasonable inquiry.
The situation becomes more difficult when the property is being offered not by the estate or the immediate heirs, but by someone who has a predecessor in title who appears they may have qualified for Medicaid. A MERP claim is not covered by the Master Indemnity Agreement, and the fact a transaction has been previously insured does not necessarily protect the property from liability. However, MERP is not a lien on real property, and there is no provision in the law for it to become a lien on real property." You can google TRGC & MERP for more on this from them.
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Yes, the house can be sold if there is no lien. All of the money that is left over, however, has to be applied to the owner's care, which may make them ineligible for Medicaid until the money is spent down. If there is none or little left over, then this wouldn't be a consideration. I would not sell the house, though, without consulting the Medicaid people for advice in the matter. There may be certain conditions that have to be met -- for example, fair market value. The state has an interest in the house, so I wouldn't sell without consulting the right people.
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