Can we sell my Mom's home on a land contract while she is in a nursing home and receiving Medicaid?


My mother is currently staying in a nursing home. She s receiving medicaid. She still owns her home . I signed a estate recovery document. We would like to know if we can sell her home on a land contract. The home has been appraised lower than originally was reported to medicaid. Will medicaid come back and want more money after my mother passes away

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If you plan to sell your Mom's house under a *land contract* that means your Mom become the bank for the buyers, thus owner financing. Therefore, she collects the mortgage payment plus interest from the buyers each month. I believe Medicaid might want that money to help pay for your Mom's care. You should contact an Elder Law attorney to see exactly how this works.
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You as mom's DPOA can sell it.

HOWEVER Realize that if the property as it is now is considered an "exempt property" for Medicaid. It remains that for the rest of mom's lifetime as long as she owns it. However as you are probably feeling in your pocketbook, mom will have no - nada - zilch of her income to pay on anything on the in her name house as she has a required co-pay of her income to the NH under the terms of Medicaid. For that reason, family most often sell their parents home as they just cannot afford to pay for all the items on the sitting there empty home of mom's.But if you have the deeper pockets and can afford the house and have a good sense of humor on dealing with an empty house which is like having a 2nd or 3rd home but with no benefit, you can keep the house. But for most, the house gets sold.

When the property is sold - you need to have a DPOA that clearly allows for any & all finances to be done for mom too - the proceeds (the $) of the sale of the home will need to go to mom 100% as an asset. All the $ from the house sale is now mom's totally liquid $ asset. The $ will take mom over the Medicaid asset allowed, so she will either (this depends on just how your state manages Medicaid) have to reimburse the state for care paid for to date OR will have to spend-down by private paying for her care till she once again gets to the Medicaid ceiling allowed in your state. You need to find out just how Medicaid for your state manages this & before you sell the house.

You do not want to get to the act of sale and find that Medicaid in your state does a pre-emptive lien on the property and the buyer has just been told by their title insurance company that until the lien is lifted that they cannot get title insurance. And as they cannot get title insurance, the mortgage company will not release funding for them to buy the property. As you know a Medicaid estate recovery exists for your mom's home, you have a duty to let the Realtor know about this, & they in turn should let the title insurance company they work with be aware too.

Because mom is getting Medicaid, you all do NOT get to keep any of the proceeds either. If the house sells for 80K and mom gets $ 74K in proceeds, that is all her $. You have to be very cautious in all this too and keep all records of the act of sale. Keep in mind that all real property transactions are recorded on the local level by the tax assessor and clerk of court or however it's done where you live. Then all this date is dovetailed into the state system. So eventually to the penny the sale will show up. IF & only IF you can clearly show payment on things related to the home (like you paid taxes or insurance) and you have an agreement for reimbursement on these, then you can present your bill against the proceeds of the sale. So you can get that $ 2,345.00 for taxes & insurance paid to you from the proceeds of the sale. If you don't, that $ 2,345 will be viewed as gifting from mom to you and disqualify her for Medicaid. Don't wanna go there…..

About selling for less than FMV, again you have to be cautious in this. If an appraisal was done by a real licensed appraiser (not the figure that a Realtor gave you either), then selling for that figure is OK to a neutral party. But if it is sold to a nephew or your wife;s brother, it could be looked on as not valid. With the difference as "gifting", this has tax implications too. Real property stuff is all filed so finding out who something was sold to and doing background on them is pretty simple keystrokes to ferret out.

First step is to find out - preferably in writing - what the state requires of sale proceeds when the home is sold, so that at the act of sale everything can go through with no issue.
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DON'T sell anything, it will interrupt Medicaid until she spends down the money from the sale. Any change in assets has to be reported and accounted for. Even if you rent it out, the net rent money (after insurance/taxes/repairs) has to go to her care.
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