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
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.
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.
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.
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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