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I'm a caretaker for a 93 year old woman who has been bed bound and almost vegetative for 10+ years. I've been caring for her for the past 3.5 years. My dad is her POA and medical proxy. I posted in the caregiver burnout thread yesterday explaining the basics of my life.
I have a current situation that has to be decided in the next few weeks.
About 8 years ago, he had to get a reverse mortgage for her care since she needs 24 hour help. That money was exhausted and now she's on Medicaid. In 2013, he cashed out the last of her stocks, when he filed the 2014 taxes the capital gains made her ineligible for the senior citizen property tax credit. He wasn't aware of the income limits and thought a senior credit was based on age only. So the 2015 property and school taxes were 9k instead of 4K. Obviously, the tax people don't care and it's his ignorance so it is what it is. They won't accept partial payment so it hasn't been paid. After October 1, a lien will be placed on the house. The current balance is 10k, he has 6k. I'm able to loan her/him (if she passed) the rest. I'm not worried about getting repaid. My dad would pay me back for sure. The only thing I'm wondering is if we should or shouldn't pay it? Due to her health, it's really impossible to know if she's going to live 6 months or 3+ years. I felt like we should pay since the lien will likely be reported to the mortgage company and put her in default. It would be terrible to be put out in the winter, etcetera. However, I would also feel awful if she did pass in the next 6-9 months and my dad had to repay me for no house. I guess I'm asking if anyone knows how to best proceed? I've never known anyone who had a RM or unpaid taxes so I have no frame of reference except what I've read up on. Has anyone had a relative in this situation and/or passed away with unpaid taxes and a RM. It's champion mortgage iirc.
Nasmir, please don't reply. Thanks

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What you have to understand is that she had a massive stroke 10 years ago and upon release from the rehab hospital, the dr said she would die within a year. The "within the next year" diagnosis has been happening since then. My dad has done more than anyone could expect especially when he's not even a relative (she has no family). She outlived close to a million dollars for the home and property care. My dad is doing all this from the heart. He's not going to get anything and he has given up holidays, vacations, quality of life to keep his word. So just because I'm the one on here asking questions doesn't mean anything, he's not into computers or stuff like this. He is doing his best and let the bill go because he felt her immediate needs and limited time were more important but obviously, the Drs were wrong again and the situation has changed. Anyway, the issue is over and the bill is being paid tomorrow. Thanks for those who gave helpful advice. I really appreciate it ! :)
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What benefit would selling the house have since she's still alive? She will get nothing from the sale since the house has lost value. She is broke and the look back period would have a penalty period preventing a quick move to NH. Furthermore, RM companies have a deal with the government so they are going to get the money back even if the property is worth $10. Like I explained, she got a large bill for one year due to a mistake, she's been "near death" for a year so when the bill came and it was unable to be fixed, my dad just felt like she doesn't have the money and her time is short but a year later she's still here and there is a lien coming. I stated in my post above yours why calling a predatory RM company isn't a good idea at this point. Therefore, the bill will be paid. Advising the sale of the house and the moving of a 93 yo severely damaged and incapacitated woman during winter in New York might be the worst advice ever.
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Just a clarification...liens must be paid before a purchaser takes title at a closing. Any title work for a potential purchase will reflect existing liens as well as requirements for addressing those liens.

In my commercial and personal real estate experience, purchasers were not responsible for liens.

Purchase agreements also typically have standard provisions requiring that the seller provide title free of liens, but subject to accepted "building and use restrictions and easements of record", as the standard language states. These are beneficial easements and transfer with the land. Tax liens do not.
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You have mixed up a lot of situations here. You are not the woman's POA and not responsible for making her decisions, it seems like you are doing that on behalf of your dad. So really, you're an interested party with no real interest.

Tax liens are going to get paid sooner or later, by her, the bank or the new buyer. The bank already knows they are in default, but if what you say is correct, that the house has lost so much value, they know they are better off as long as she keeps the house. If the tax authority takes the house and she is unable to pay the loan, the bank will be the default owner, it will go into foreclosure, and the bank will own it and try to resell it via auction or for whatever they can get for it to cover their own investment and that of the tax authority. This happens everyday everywhere. People are unable to pay their debts, and the bank takes the property. It is an unfortunate ending to a long life, but it is what happens.

A meeting with the mortgage company is long overdue, and your dad should work with them to try and prevent foreclosure by selling the property now for as much as possible, to cover the RM and debt. If it can't be sold for at least that much, it will go to foreclosure and it will be the bank's problem.
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I researched the RM company she has and worst case is immediate foreclosure and best case is they pay the taxes and get repaid in 24 monthly installments with interest so like I said, no sense to tell them anything and just put the shortfall on the 0% cc, then move on. Thanks for your advice. I didn't know that my dad was doing this RM thing because it's the stupidest thing ever.
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You might want to contact the mortgage people and let them know exactly what is going on. The town just wants their money and the bank might pay it because they don't want a 328K house taken from them. They may start default proceedings but this is a very long process now. Depending on the bank and other factors it could take up to three years. During this time the bank would rather have someone in the home that they feel will take care of the property for them. They will not throw someone out until they can complete everything legally.
This is the average for a typical loan default. Considering all that the bank can be very flexible some times in order to keep their loan current.
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I think the best thing is to just pay it and move on. I don't see any benefit of letting the people who can take the house know that she's currently in a position where they can take the house. If I had some evidence from my research that they would pay and no consequences for her, ok, but I've only seen speculative stuff. Senior advisor, can you direct me to any info about this? I'd definitely read it but my gut still says to pay it before more fees are added or the lien is filed. I know the rm people are supposed to help you but the tax sale could happen while I'm waiting on the rm company's solution. I think if my dad would have called them last year when the bill came but I want to pay it before 8/15.
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http://www.consumerfinance.gov/askcfpb/1511/what-should-i-do-if-i-have-reverse-mortgage-and-i-received-notice-i-am-delinquent-default-or-behind-my-property-taxes-and-insurance.html
Most of my research comes back to this type of answer
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Well, this probably should not remain a DIY problem/solution. Senior Advisor may be right, but whether what they decide to do about it is in your favor or not, it may be hard to say.
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But wouldn't them knowing she's delinquent put her in default and give them the chance to call in the loan? There's NO equity left in the house because property values have gone way down around here, not sure why, it's a nice area. Maybe they were overvalued before? The house was appraised at 500k at the time of the loan, now it's 328k, that's a bit less than the original rm. I know that they have government protection and will get their money but is it really a smart move to contact them? I'm just worried about a backfire.
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The mortgage company should be notified from the locality that the taxes are delinquent. Once notified they should intervene especially if the delinquent taxes are much less than the value of the mortgage. The mortgage company is not about to lose there entire investment due to tax delinquency..
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The tax issue is only for the 2015 year. It'll be back to normal for the rest of the years, which she can afford. It's not 10k normally, it's near 4k. It was the excess income that cost her a big exemption. I'm just planning on writing a contract with the amount I'm giving, the date it has to be totally repaid (I'm using an 18 month 0% cc check I have the cash but I don't want to lose the little interest I get or be 4k less liquid). I'll definitely make a copy of the check and a memo that it's a loan for taxes. The math says that the lady has about $250-300 to pay me each month but if she passed beforehand then my dad will pay me. I'm not going to be a creditor of the estate if there is a balance, I'd just have my dad pay me. I'm not worried about getting screwed. The house lost 175k value from the time of the RM so there is definitely no funds after the sale. The items in the house are garage sale type stuff, she doesn't have anything that anyone would call assets. I just figured that a garage or CL sale after the passing would probably lighten the load of my dad if a large balance remained. Anything new or valuable like tvs or mixers, etc is stuff I bought myself and I have proof. She has no creditors except for the RM, tax situation and utilities but she also has no assets so it's likely going to be a clean up the house and turn in the key and we all move on. I don't see it being messy in the end. But yeah, I'm going to get the taxes paid because maybe my dad would still be on the hook for them even if she passed since it's a known default? I'm not sure about this stuff because I've never paid a bill late or bounced a check or anything like that. I thought a lien meant if you sell the house they get paid first, does it really mean they come right away and sell it? My cousins inherited a house but never paid the taxes but it took 5 years to lose it. God, I have to google more! But It's a moot point because it's just better to pay the taxes and if my dad gets stuck paying for most of the excess, I'll feel bad but it was his error anyway so I don't think he will trip. Thanks for the great info! :)
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So there's a 10K prop tax debt due by 10/1 otherwise property goes onto tax assessor tax sale/tax reception list; prop owner is pretty well out of it and moving her could be very detrimental for all involved. And between you & the DPOA there is the funds.

That's it, correct? I'd go ahead and pay the taxes. It's a band-aid on the problem. But keep the RM from being called in and gives you time to try to figure out just how to make things work better in 2017. Since you have the $, i'd do it as it will just be too too much stress to deal with if all goes to hell with the RM, tax assessor the lady's health etc.

BUT I'd suggest you look into some sort of paperwork before taxes paid as to the $ used to pay the taxes. Dad as the DPOA can't likely do this, but you perhaps could do some sort of promissory note as to the 4K to pay the taxes. I'd get an elder law atty to review all this as you work for the lady, its your dad, etc it all gets quite murky as to commingling of responsibility, fiduciary duty, etc. Actually if the tax situation goes on for next year, year after... you want something to show an agreement to repay from the assets of her estate which will be her home. If its a promissory note, that's a secured creditor and it goes to be paid in probate after the RM but BEFORE any Medicaid MERP claim as merp usually is an unsecured creditor.

Depending on the value of the house and what is needed to make the RM repaid & released, there could actually be funds left after RM is paid. Those funds become assets of the estate assets then get paid to whatever claims are made on the estate. A secured creditor will be ahead of one that isn't. Just how probate is done will depend on your states laws. But secured ahead of unsecured is pretty standard. If she lives 5 more years, that's 50K. Thats not an insignificant amount of $. Give some thought if the situation is realistically supportable for years & years.
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Sorry, forgot to mention that there aren't any payment options or hardship considerations. I inquired and explained but no dice. He made a mistake and that's that. The stock sale is done online, you never deal with a person so it's not like there was a way to be warned. I'm definitely leaning towards paying them, I just don't like the idea of my dad possibly getting stuck with the debt but I guess after he sells the unnecessary household items it might be close to the debt anyway. She doesn't have any debt except for monthly expenses and the house will be turned over. Maybe that will make it less of a gamble?
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@gardenartist, I'll have to check your links, sometimes when you google things the amount of hits is overwhelming and I see so many different answers.
@vstefans her taxes were done correctly, she couldn't deduct the cost of health care, it's just the capital gains that made the mess. I can see how my dad made the mistake because in my home state, the senior deduction is age based. I think the lawyer isn't a bad idea but I have a feeling that the answer is that it's a crapshoot, we could pay and she passes the next day or not pay and she lives for awhile and the fees or drama grow.
Thanks for the responses, I don't see how to up vote on the iPad but I will on my phone later!
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No, I never said that my dad is giving me the house. I said I would feel bad if she passed a few months from now and then my dad would have to repay me for a home that is no longer needed, ie that was a waste of money.
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Hannah, your Dad promised you the house? "my dad would have to repay me for no house" You will not get the house, there is a reverse mortgage and Medicaid lien and now the property taxes. Sorry, but it's a false promise.
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Get a reputable tax attorney, who also knows a little about Medicaid. I wonder if they took all the medical expense deductions they could have. It sounds like you did not have good help with taxes if you had no warning about the result of selling all the stocks at once, and I have no idea if the lien on the house would mean what you think it does if it is already reverse mortgaged and a bank basically owns it and gets it when she passes. I don't know they could tap to repay any taxes if she has nothing left at the end, if all the monies went for her care. Sorry to hear you are in this fix because of such an innocent mistake on your dad's part!!
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There are a few issues that could affect your decision:

1. You write that a lien will be filed after Oct. 1. I'm not familiar with NY delinquent tax laws but that seems to be quite rapid for defaulted taxes. I did do a quick check though and it seems as though NYC has a rapid tax default program, which is really quite draconian, although I did find there are some exemptions.

There are some NY posters here who probably have more knowledge on this issue than I do. As I wrote, I just did some quick searches but didn't have time to check out the statutes, which should be done.

2. Even if there were a tax sale, there would be a redemption period. Another quick check provided some more helpful information:

nolo website

3. If the taxes aren't paid and the RM mortgagee is notified, and if it institutes foreclosure, how much time this woman would have to find a different place to live would depend on (a) whether NY has foreclosure by advertisement or (b) in equity (by litigation). The former is shorter; the latter is longer.

4. Even if that happens, there still might be a redemption period, depending on NY law. Of course, by that time there are fees, and more fees added to the amount to be redeemed.

5. My personal opinion is that if you didn't pay, the situation would become very unsettling for all of you, especially the elderly woman, if she understands what's happening although it does seem as if she wouldn't be able to in her condition.

6. If the taxes aren't paid, and if the house is foreclosed for delinquent taxes, you face another major issue and that's where you and your employer would live - w/o funds from any sale, that could be a very daunting prospect to face.

So, if it were me, and since you're not concerned about repayment, I would pay the taxes. But I would also consider consultation with an elder or a tax law attorney to determine if there are other options that can be considered and if there are any other ways to make arrangements to pay the taxes in arrears.
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