Quit claim on our home, how will that affect our house or his Medicaid?

Igloo, BTW, I could only cringe when I read your insights on the LA post Katrina housing and title situation.   Believable in some ways, but literally a catastrophic legal mess.

Ran out of space...

That raises another issue. When I bought my house, one of the benefits was a large yard, about 1/3 acre.  Typically, a legal description was included in the Purchase Agreement, and a basic boundary survey was provided.  I was obviously very involved and reviewed everything, and discovered that the legal description only described a portion of the larger lot.

It was easy enough to plot out the description in the survey and see that it didn't match with the legal description in the purchase agreement. 

The real estate agent argued with me; I argued back. I refused to close until the issue was clarified.   She was annoyed, very much so.  I was disgusted, but wanted that house.

It was clear to me that she didn't even know how to read a legal description and compare it to a survey.  

But the purchase agreement legal description did not match the survey or the 1/3 acre.   So against her desire, I took over and contacted the owner directly.  Guess what?  The property was deeded to them in 2 separate parcels, the larger of which wasn't included in the description provided to the title company.  The owners weren't real estate savvy and didn't know that they needed to provide both deeds. 

So at that point, the issues were resolved, the legal descriptions were corrected and we closed.  The realtor told me that she had decided to retire.  Given her screw-up, I thought that was appropriate.  

Not sure if my first post answered your question???

Another thought:   an owner or buyer could ask his/her attorney to order a foreclosure report to be extra thorough.   Some attorneys might balk at this, though, wondering if the client had the expertise or knowledge to review and interpret the report.  

Thinking back to 1973 and forward when I first was involved with foreclosure reports during economic downturns, and trying to remember to answer your specific question....there's another way to describe this.

Typically:  builders couldn't continue construction, defaulted on the construction loan but also couldn't pay their contractors, so they and their subs filed mechanics' liens against the property.    These unpaid construction liens often constituted the majority of encumbrances.  In a sense, they could be considered unsecuritized loans, as the contractors had no security for the labor they at that point had lent to the builder.

I don't recall ever dealing with an unsecuritized loan by a major lender though, although there was one peculiar one when the security was not property but was a herd of animals.  
I would think, since the foreclosure report is very thorough, that anything recorded, securitized or not, was identified and included in the foreclosure report.   That's probably the primary reason we were specific in our choice of title companies.  One, in particular wasn't up to par.

A foreclosure report is like a microscopic exam of title; it picks up everything.   Easements are included, but they are standard in title reports anyway. 

I have a vague recollection of seeing a debt obligation that wasn't secured, but it was unusual, and typically outside of the range of work we handled, since clients typically were lenders.  I think that one was between relatives; we learned about it through the title work, although I don't recall if it was a foreclosure or sale. I do recall some encumbrances created by unrecorded driveways that crossed other property, but they showed up in surveys.

The surveys worked in support of and in conjunction with title work, and vice versa.

That was one of the reason we always ordered ALTA surveys, not boundary surveys which are typical for residential purchases.  (BTW, I understand that now real estate companies don't even order a boundary survey, a really backward and stupid move in my opinion.)

One reason the title company had to be very, very cautious and specific is b/c foreclosure of the loan would address every single encumbrance, and if missed, title to the property after conclusion of foreclosure would not be clear.   Then the big law firms would go after the title companies, and I'm sure they didn't want to tangle with the Detroit heavyweights.

We only got foreclosure reports from title companies with which we had dealt extensively, and to my knowledge, they're the only ones really qualified to do them.   We would never rely on an individual or small company that wasn't a major player in the title field; there was too much riding on identifying and extinguishing all indebtedness.   Our client could be left w/o clear title, and we would be the cause of it, but would then turn to the title company.  So, all the way up and down the line, everything had to be 100% accurate.

I don't see why a potential buyer would be precluded from ordering one, but I don't know of any that did.  That's an excellent question though, and I've made a note of it so that if/when I buy my next house, I raise that issue.  The best, well known and reliable title companies have either segued out of the field, or melded with new companies.  Burton and Lawyers were the top ones when I was working.  

I don't know of any reason why an owner couldn't order one, although the big title companies with big law firm clients might balk at a buyer's reasoning.  Still, I think you raise an important issue, since buyers rely on title reports ordered by real estate companies.  


The real estate agent argued with me; I argued back.  The description did not match the survey or the 1/3 acre.    So against her desire, I took over and contacted the owner directly.   Guess what?   The property was deeded to them in 2 parcels, the larger of which wasn't included in the description of the title work.   The owners weren'

Garden, on the foreclosure report, would that find both securitized AND unsecuritized lending?

I’m unfamiliar w foreclosure report. Who does them? Can a potential buyer order one? Or are they done by a lender? Can the owner order one?

Igloo, you wrote:

"- title company does their standard search on the property; finds totally clean clear title; property gets conveyed via QCD w title report attached. Might be difficult to find a title Co that will do this without also getting & paying for term limited title insurance."

Perhaps a way of approaching this issue w/o getting title insurance is to get a foreclosure repor, not a title report.   During downturns, that's what we always ordered before proceeding to any kind of legal action.  Foreclosure reports can be like "shaking the family tree."  Anything that might reflect an interest is documented.  Only the positive and beneficial encumbrances (such as electrical and gas lines) weren't foreclosed, for obvious reasons.

And given that the underlying issue is identification of parties with interests subject to foreclosure, the title companies never took positions on rewriting the policies and issued limited title insurance.   They were paid for a one time effort, even though it was possible they could get additional work after the foreclosure suit was eventually dismissed, or forbearance agreements were executed.

I read your history of complicated and undocumented title issues that existed then arose during Katrina.   I never knew that those issues were ones that prevented some reconstruction.  When I saw photos of abandoned homes in newscasts, there was NEVER any discussion of how clouds on title contributed to the inability to receive assistance.   What a nightmare.

Igloo, I was hoping and glad to see that you came along and addressed this situation, including the areas about which I know little.    (Sometimes I thank my lucky stars we never had to deal with Medicaid.)

please do not do a Quit Claim deed & for a whole host of reasons....

- Garden has posted excellent insight as to mortgage. The big issue imo with doing a QCD is that as long as there is an outstanding mortgage, home is NOT fully owned. You cannot convey ownership on something that you do not own. You - all 3 - have an equity share but do not yet “own” it. Mortgage co would have issues w QCDeed & should mortgage co find out, they can call in the loan in full & due in 30-60. Mortgage co does not have to play nice either. Please reread Gardens post, u do not want to test a mortgage co. You would need to have a Release of the Deed of Trust filed at the courthouse to do a proper title change whether Warranty Deed, or QCD.

- on Medicaid:
If he is on title as an owner, then his % ownership of the home (as per mortgage aka the Deed of Trust), is an asset for his LTC Medicaid application. Issue imo is what category of asset for Medicaid…..
- If it is his home, aka it’s on his driver’s license &/or he maintains a homestead exemption, then Medicaid allows for the property to remain an exempt asset for his lifetime. So is it his home? and you have documentation to show this is the case?
OR
does dad have his own home? So it’s an entirely different property?

the answer ime will make a critical difference as how to deal with all this. So which one is it?

Please realize that doing a QCD is transferring of an asset. It’s recorded at courthouse. Easily discovered. Once filed it’s very difficult to undo.
QCD sound all DIY easy peasy but do pose problems. Like tend to have issues to sell a house as QCD are not guaranteed like a Warranty Deed would be. Makes a harder sale. Lenders tend not to loan on QCD property or require a Quiet Title action before lending done.

Medicaid has issues with ANY kind of asset transfer & can place penalty on the applicant. Medicaid has a 5 yr lookback of documentation that dad must provide but can go to 10 if something is suspected. Dad signs off on an all access pass by applying. Caseworker has access to all state / county databases & IRS too. QCD will surface eventually.

medicaid requires a copay of almost all dads income to the NH. So if you need dads $ to float house expenses, that $ will be unavailable.

What makes doing a transfer even more sticky is that in order to be eligible, aka financially “at need”, for LTC Medicaid you have to be impoverished or within 30-90 days of impoverishment and in a facility that accepts Medicaid. Impoverishment for solo applicant is 2k in nonexempt assets for most states.
If dads 1/3 share of the home is $89k and his state LTC Medicaid pays $175 day room & board reimbursement, that’s abt 500 days of ineligiblity for LTC Medicaid. 500+ DAYS. Penalty starts date application filed. Now Medicaid tends to take 3-5 mos to process. So that’s 3-5 mo of NH bill for Dad. When Medicaid finds out and places the ineligiblity on his application the NH will get the notice as well. Medicaid claws back payments. NH will fully expect to be paid and have a signed contract for someone to be financially responsible for dad to remain there. They can turn it over to collections if need be and get a judgement against dad. They can contact APS to intervene. They can find a reason to have dad go to the ER / ED and then refuse to take him back. That he is ineligible for LTC Medicaid will be notated in his chart. Imo He will be toast on getting into another NH without coming in as private pay guaranteed by you or other family. Your options get real limited once Medicaid ineligiblity happens.

So is your home also his (exempt asset)? OR does he have his own entirely different home as his homestead (nonexempt asset)?
and
is ownership 1/3 each as per mortgage?
and
has dad been paying his % share of costs on all property expenses since the day you bought the house?
the answers can make a huge difference as to how to approach all this.

Who told you to have a quit claim deed executed?  An attorney?

If your father-in-law signed the mortgage, he's a co-mortgagor (borrower) with you and your husband.  That means he has a legal obligation to pay along with you and your husband even though he's not making payments.  However, as long as you and your husband can keep the mortgage current and in good standing, it's not likely the mortgage company (mortgagee) would raise an issue. 

But the mortgagee would have relied on his participation to grant the loan. 

And since he did help you get a mortgage, his assets would have been taken into consideration by the mortgagee in making the decision to grant the loan.   His entry into a nursing home would presumably direct a good portion of his financial assets toward that support, even if he's not making payments on the loan, but theoretically would lessen what's available for the loan, and perhaps affecting you and your husband's ability to maintain the loan and keep it current and "in good status." 

I don't recall whether it's legal or not, but it would be viewed negatively by the mortgage company if his name was removed from title, and his interest "extinguished" as it's known in the financial field.

Worst case scenario, depending on the mortgage company, is that it may consider this an event of default under the mortgage, and "call" the loan, which means it would be accelerated (entire balance unpaid would be declared now due) and full payment  demanded.

There's probably a clause in the mortgage that addresses this situation.  Check the "events of default" clauses.  You and your husband should probably spend some worthwhile time studying the mortgage and any Promissory Note you might have signed to learn how being in good standing on the loan could change, and what your obligations are, as well as what actions could be taken by the mortgagee.

What I would do though is:

1.  Study the mortgage to search for the terms I've raised, and also to understand exactly what could happen if one of mortgagors becomes unavailable and/or is removed from title to the property.

2.   Work out a budget to keep the mortgage current, and plan to show that budget to the mortgagee or one of its reps to confirm that you and your husband can keep the loan current and in good standing.  You'll be respected for taking this pro-active approach.

3.   Be agreeable to an Amended (and sometimes "Restated") Mortgage removing your FIL's name, and find either a good real estate attorney or elder law attorney with real estate experience to assist you with removing your FIL's name from title.

I'm not familiar enough with Medicaid to address that issue.