Is selling home in need of repairs under market to pay for nursing home, avoid forclosure, later applying for Medicaid fraud?

Per the advise of an excellent Elder Care attorney, my mother was able to keep her home. We live in Florida which (at least at the time) is a Homestead state. She was able to use the little bit of money that she had left in her savings to do repairs to her home. After they were done, I followed the detailed instructions from the attorney as to how to get her "Medicaid Ready". When my mom passed away the home was mine to do with it as I wished. (I don't have any siblings).Good luck and best wishes.

Pamstgma, no you don't have to sell to get Medicaid. But with my Mom it takes all her SS to pay the taxes and utilities. Can't rent because wouldn't get a CO. I don't have the money to bring it up to specs. I could use that SS to help pay for Moms AL. Having another home to worry about is overwhelming. Always something.

Wendy - you might want to give some thought as to what kind of costs there will be on dealing with your dad's house before you get too too deep into this.

So at best if dad's house sold and the mortgage satisfied, all that could be left is 5K? $ 5,000.00 - is that right? that is very little money for a lot of time & energy both for dealing with the house and then dealing with ineligibility & re-eligibility application with Medicaid. If things drag on and there are surprises in getting closing done, there may not even be 5K.

Placing a home on the market has costs. Utilities, taxes, insurance, maintenance. So right now just who is paying all these costs? Buyers can place a lot of the house sale costs onto the seller, especially if its a distressed motivated seller situation. Taxes have to be current in order for closing to be done; if he's at all delinquent, there will be interest and fees as well as the past due. For most places taxes are due in full by end of January unless there are existing exemptions/waivers, so someone is going to need to pay those taxes if the house isn't sold & gone asap. Dad is on Medicaid and so all his income less a smallish personal needs allowance must be paid to the NH under Medicaid's copay / SOC (share of cost) requirement. So who is paying house costs; Or are all of these being walked on like like the mortgage is?

Are you or other family paying for any of the house costs and needing to be repaid? If so, you are likely not to ever get reimbursed. Medicaid really tends to view any $ spent by family on their parents to be done under a sense of familial duty so not to be reimbursed, you'd need to have some sort of pre-existing note or agreement to do this and Medicaid would have to allow. It's the sort of issue that holds up a closing and can kill a sale.

If the property could take months to go to a closing and you are finding that you personally are having to front all sorts of $ and you don't really have the $ or the energy & time to deal with the house, it may be best to just let the foreclosure happen. Dad walks on the house. It's not like he needs a good credit score. You send the keys certified mail with the return registered receipt to the mortgage holder to the address in the foreclosure notice. Medicaid could care less if his house is in foreclosure; as long as dad meets the medical and financial "at need" criteria for Medicaid, he's good. Mortgage companies have a whole established system for dealing with abandoned blighted PIA properties. None of this is your problem. You just mail the keys. The only blowback will be if & when dad gets a 1099-C Cancellation of Debt for the foreclosure amount but that's a pretty straightforward CPA tax filing for dad for whatever tax year the 1099-C comes for.

Keeping a on-Medicaid & in a NH parents homestead can be done. But keeping it and fronting costs on it, just to end up having Medicaid get all the proceeds from a sale, may not be the best financial strategy.

Selling a distressed property below market value is not fraud in and of itself. It can be deemed fraudulent if the right procedures are not followed. I would suggest, as others did, that you get the home appraised by a legitimate company in your area. That way you have proof of what the homes top sale price would be. As others also said if mortgages and or loans are owing on the home the lien holders would have a say in the sale of the home. Good luck on getting it all straightened out.

Wendy: Since you mentioned foreclosure, is the home a short sale?

pamsteman is correct, the house does not have to be sold "before" mom can be admitted to the n.home. My grandmother had Medicaid, and she had a very old farmhouse (no farmland anymore). They literally took her from the ER, to the hospital, and within a week she was placed at a fairly spartan, but nice n.home in the small town near her rural area. It took about a year and a half before her home sold, the wiring had to be brought up to code, and there were lead based paints everywhere so I remember painting over everything with 2 coats of paint. The windows had to be replaced, due to lead paint, and non-operational. The furnace was ancient! The Medicaid office was the one who made us make the repairs, because the house was not up to code, and therefore the FHA mortgages could not apply (something like that). So we were forced to do the repairs, however depending on the housing codes in your area, maybe you don't need to do all that. It was a big pain, and we tried to work around it, but in the end it was easier to swipe a paint brush and hire an electrician, than to fight the building codes. After all the codes were met, the house sold for about $50,000 which was alright, I guess, it all went to the n.home bills anyhow. Grandma was always very self-sufficient and never wanted any government help, so she would have wanted it that way (but several of us grandkids felt we wanted to keep house in family).

You don't have to sell the house to get Medicaid to pay for the nursing home. Please sit down with the financial aid person at the nursing home and bring the notice of foreclosure with you.

Check with ur local Medicaid office. I am selling Moms house as is. Called Medicaid and was told they r aware of the housing problem in my county. As
long as I don't sell it for a dollar or to a relative too cheaply they understand I have to get what I have to get.

As long as the house doesn't sell the first day on the market they are probably not going to question you. Use a realtor if you can, and keep the comps in a file. Ask for a copy of the home inspection (write it in the contract) so that if anyone says anything you can say but this or that needed to be done. You should be fine.

I would say that he would qualify IF the house does not sell at the current assessed value, than that value is not accurate. The market assessed value would have to be dependent on dilapidation. The Dept. of Social Service's workers would have to be aware of that, and that would be considered in the contract. And Medicaid is what he would be applying for, not Medicare.

Forgot to say that I also had one of those "we Buy Ugly Houses" guys go through the house. He provided a written contract that included his assessment value of the home. I didn't sign the contract but it did provide another document about the current condition and value of the home.

Use an attorney - worth every cent spent! We did an "AS IS" Auction. Based on the advice of the attorney, the auctioneer provided a written letter that in their professional opinion and the condition of the home, it sold for "fair market value".

My mom was on Medicaid in Florida which at the time was considered a Homestead state. (not sure if it still is).Her home was totally untouchable as far as paying for her nursing home. I had an excellent Elder Care attorney who advised me. I'd strongly suggest that you contact an elder care attorney. Best wishes.

If a person has Power of Attorney, then that person can represent his/her parent in the sale off a house, as long as the correct wording is in place in the POA. One reason to use an Elder Law Attorney who can put in the wording needed.

This year my Dad was able to sign the Listing Agreement and he was able to understand the Contract when presented. When the Contract was ratified, I quickly took it over to the settlement firm and made sure Dad POA had the correct wording.

When the settlement date approached, Dad wasn't physically able to attend the settlement, thus I was able to sign for him.

1. If you are not the owner of the property you can not honestly answer many of the questions as to condition. ...do you KNOW the leak in the bathroom was repaired?..do you know if a permit was obtained before the wall was opened up?..do you know if the electrician that put in the light in the driveway was licensed?....
If your father can not answer these questions and more about the condition then you are talking about an "As Is" sale.
Is your father competent to agree to the sale, answer questions and go through closing? If not you may have to obtain Guardianship in order to sell. there is a lot of restrictions in selling a house as Guardian. Please consult an Elder Attorney as to how to proceed.
Get what you can for the house.
Get the house sold as soon as possible.
You need to get as much as you can just in case you have to apply for Medicaid, they will look back to determine if the house was sold for market value as well as to how the proceeds were spent. Again...consulting with an Elder Care Lawyer will help you in this regard.

If a buyer has been located, even if the buyer has offered substantially below market value (for whatever the reason), you having POA have the ability to represent him in that sale. The Medicaid (not Medicare) authorities have up to 5 years of the sale to inspect the home's sale documents if your father requires Medicaid assistance. It is not fraud to sell your father's home below its assessed value. It may be deemed fraud if the sale benefits yourself or other family members, such as buying it yourself or selling it to a family member without an appraisal at a price far below assessed value.

Also when my dad sold his house, it was "as is"....meaning anything found on inspection would just be informative.

Sounds like your Dad has very little equity on the house, or is it a Reverse Mortgage and after everything is paid back, plus interest, and fees, there would be $5k to use for your Dad's care? I would chat with Medicaid or with an Elder Law Attorney to see what are the correct steps when it comes to a house that will be going into foreclosure.

If the house is going into foreclosure I don't know if the bank would let you sell the house below market value. Who has decided on the market value of this house? If you can afford to do so [or your Dad pays] get a licensed Appraiser to give you a written report on the worth of the house. I did that when I sold my Dad's house and I didn't have the time or energy to make repairs/updates. The house was listed with a Realtor a tad above the Appraised value, and sold just a tad below value.