Hi, and thanks in advance for any help here. Basic background: my mom's husband was in a facility and signed all of the MERP papers without my mothers' knowledge. When he passed, she got a packet in the mail basically saying she doesn't own anything, even though, at the time, she was still paying off her mortgage. Now everything is paid off, and they allow us to squat here, but the property taxes, county taxes etc., are many years behind and she is being sued with the threat of them taking the house and selling it to the highest bidder to appease this. I guess I am kind of wondering how this would work, as she doesn't own the property or houses anymore?
Would the MERP ownership/lien supercede the county taking away everything for payment or ??? Just confused here as to liability vs collection and whom is entitled to what. I mean, she can't pay the taxes, and she owns nothing for them to sue for or take? I guess I am trying to figure out if the MERP ownership prevents the county from taking the property and house or how that works. Thanks again, if more info is needed I will try to provide.
TX courthouses all have fairly informative websites & some allow for online purchase of documents (a pdf). Like a WD is $ 7.50. But threading through this if you don’t understand courthouse stuff can be daunting. WD = Warranty Deed; TR = Tax Redemption. Your best getting a wad of $1.00 and $10 bills and couple of rolls of quarters and go down to CH around 9:30 AM with whatever last tax assessor bill (as it has the PPIN, parcel info which is what is used for filing) and go to info desk to see what dept has the documents. 9:30 is good as court is in session so the CH staff is less busy and has time to deal with the clueless. Then head over to buy copies of everything filed onto the Property. It could be several items and in different departments. Cash cause they can do it right then; credit card have a hefty surcharge; check have to be cleared by banks so add on weeks..... really stack of low denominations cash and quarters. If filings before 1990’s those are likely in an annex and have to be mailed to you & have a extra fee for this.
If there’s easements or vacations on property, those might need to come from Austin. I had LCRA vacation and a TxDOT easement for an property on an aunts estate and took forever to get copies.... most land or property never have these but if you do write down the exact address told to you by the CH staff to which to send your request.
You mentioned a mortgage. If there was one and it was paid off, the original cancellation she got back from the mortgage holder HAD to be filed at CH. This is really important and often not done. Any secured lending will have a release document that has to be filed. This is mucho importante!
Heres my guess as one who has been Executor in TX 3 times:
MERP likely doesn’t own the property. TX is a pretty pro property rights state (which most states are not) And this philosophy extends to MERP. MERP is an unsecured creditor. Unsecured creditors cannot easily acquire a homestead property as there’s no easy “standing” to do this. But a claim on the property can happen and this can cause a cloud on the title when you go to sell it. The cloud shows up when a title co does thier research to issue title insurance. If probate is opened they have to file a claim properly in PC. For TX it’s a Level of Claim by Class probate system. MERP is class 7 & everything in class 1-6 ahead in priority of payment. Also state dept of aging (TXDADS) not really in the real estate biz; MERP is about being repaid and repayment subject to TX probate & property laws plus if the recovery action meets the cost benefit requirements.
Usually if there is a surviving spouse (your mom) still living in the house, that’s an exemption for TX. She should have filed a response to MERP’s NOI (notice of intent) and filled out the questionnaire. If there was a mortgage at the time, they are a secured creditor. Between surviving spouse and secured creditors existing, I’d bet it wasn’t deemed recoverable unless this house was higher value and mortgage debt ratio low. She could also actually open probate to get the situation all moved to probate and under their rules if need be. For TX probate has to be opened within 4 years of DOD.
for tax Sale I’m doing another post on my thoughts.
its going to be long so get a cup of coffee or adult beverage.....
Tax sales in my experience are done by folks who want to make $ on the heftier interest charges by city / county tax assessors. Interest can run 18% - 30% depending on what a state allows. That’s a very VERY good rate of return ASSUMING the property owner pays off the taxes with fees and interest due. Folks that invest $ into tax sales rarely want the actual property, they want the interest. And interest paid relatively soon so they get thier $ and interest back. to use for other investments.
Realize that to do tax sales, you have to place $$$ with tax collector ahead of bidding. Or you have to pay off your bid in full within 72 hours. That’s real $ out & held by tax collector until there is either a redemption by a bidder to acquire property OR the property owner pays the back taxes with interest & fees. I’ve sat at tax sales with folks next to me with $100,000k++ put up to buy properties. Newspaper has all listed and investment groups have stuff scoped out as to those to bid on with a ceiling as to bids. I’m there to bid on specific property as it’s adjacent to stuff we own or have interest in - I’m not the usual bidder as I want the actual specific abandoned piece of land.
To do a redemption as a bidder, it’s going to dependent on your states laws as to how straightforward for an bidder / investor to do. TX is a very pro owner property laws state so the old owners get lots of leeway to quash an attempted redemption. Old owner can likely go an pay a yrs back taxes so the redemption gets killed for that years cycle. LA does something like this too and it’s near to impossible to get a clear title from a LA tax sale acquired property without getting a sign off from all the old owners or their heirs. It is one of the reasons why even now 13 years post Hurricane Katrina there’s storm damaged property reverted to the wild with no rebuilding as between the hefty old tax bill plus interest and a dz heirs all over? You can’t get it packaged to get clear clean title.
Some states - like MS- have an easier redemption system. It’s a 3 yr system. But redemption is done by order of priority of those holding the certificate issued by your winning bid for each of the 3 years. So you as year 2015 bid highest, you get the certificate for that year. If you again do this for 2o16 & 2o17 then in 2018 it’s 3 full years you’ve paid & gotten tax certificate. Winner winner chicken dinner. So you go to CH to file a Tax Sale Redemption Tax Deed pay administrative costs and taxes to date of filing and Chancery Court places it on docket to issue a Tax Deed. You get it and must go back to CH to file it. Eventually the title changes and it’s yours. Old owner or their heirs with legal standing as per probate can try to get it back by findings with documentation in court but they have to make you whole for whatever costs you put into property.
If there are folks living there, once you have Tax Deed or a Warranty Deed you own it. You as owner can contact sheriffs dept to evict & remove them. You can call utility co to get everything pulled. If it’s a drug den, you get Dept of Public Safety to yellow line it. You can post No Trespassing signs, padlock the gates and doors. If it’s raw land you can fence it with no trespassing signs or put up something to stop any egress into land.
if none of these things have happened to you all living in the house, theres probably nobody who has actually filed for full Redemption and had it changed to a new title.
Really get all paperwork attached to the property to see just exactly exactly what the ownership is. You need to clearly know that to come up with any type of plan for his mom (I’m assuming she’s still alive) or him to do as her DPOA with financial authority. If she needs to see. Atty, those CH documents will be needed. If you get them, it’s less $$.
good luck.
The medical costs that were incurred over the years added up to more than what the property/house is worth, and we live here so MERP 'allowed' us to stay through the hardship clauses...but if ever sold they get the ched and mom gets nada because there wouldn't be anything leftover. So I guess technically she still 'owns' it, on paper, just will never get anything from it after 30 years of payments and 220k on a 95k sale. (>_<)
The back taxes she's being sued for are upwards of 30k, which she can't pay as she is literally paycheck to paycheck.
They're basically just threatening to sell the property to recoup the taxes at this point. We still have to see what is what as far as maybe paying it off monthly to avoid all of this, and are also going to look at options for property tax loans. But from what I've gleaned online with calculators and such, it will run about 600/month plus whatever interest charged through the 3rd party lender(s). We were going to see a lawyer this week, but for sure will get the documentation first, so thanks for that as well.
She is also actually considering just letting everything go and telling them to take it, but wanted to understand 'who gets the money' between the MERP and the tax hunters, or if she is out of pocket on the tax liabilities either way. If I read (and re-read lol) correctly, am I right in assuming that the priority of payment defaults to the tax hunters first, and then MERP gets the leftovers? She is kind of just leaning towards moving somewhere else and renting, and letting them take it, as she really can't afford the upkeep anyway, and 'owns' it, yet not to any real end.
I know it boils down to a more personal decision on her part, but would it be better to try and just pay the taxes however she can just so we can stay here, or is there any validity to saying to heck with it and let them take it to be done with the ordeal, since she could never get any financial gain anyway? Honestly, the 2 houses on the property are falling apart around her ears as it is, basically it is just the 4 acres of land that would hold any real value. Apologies for so many questions, she is just super stressed out and kind of lost, so I told her I would troll the net for smarter people than myself. :)
I really appreciate your time and efforts with this, so truly, thank you again for giving me a direction to point her in.
Yeah a lot of quasi legal “speak, but it’s the type of phrases you are going to hear from others or read in the chain of documents. The key imo is “secured” vs “unsecured” debtor as to who is first in line to put dibs on the property & how/why they can possibly do it.
The mortgage was secured debt. The property was placed as a securitization to the lending to your mom by the mortgage co. So if there was still a mortgage or other secured lending (like a HELOC or a Reverse Mortgage) they are first & foremost as they are “secured”. I’d bet any property tax loan will be “secured” debt and if she’s at all late on payments, they will file for ownership in a heartbeat, it’s predatory lending. Only once a secured debt is made whole can any other debtors or claimants get in line to try to go after what’s left.
I will say paying on a mortgage that’s hugely negative equity - which it reads your mom’s situation was - is generally looked at as bad money management. Paying 225k on something worth 95k not good. I imagine she bought it or remortgage it during the go-go years of TX real estate before stuff tanked. Lots of folks walked away from thier negative equity mortgages & let it foreclose as it made better financial sense. But whatever happened is past all that now.
To me the Co Tax Collector and Medicaids MERP are in a similar bind in regards to your MIL. They both have unsecured debts owed and she has no means to pay either. If say she should find a way to pay off the years of unpaid property taxes along with the hefty fees & interest what’s the sense of doing this if the Medicaid MERP lien is close to the value of the home is a pretty solid viewpoint.
Unless - and honey to me this is important- unless either:
- Co tax collector will work out a Payment plan & she pays on her own or you& your hubs pay it like clockwork so anyone holding a tax sale certificate cannot file to get a redemption and Tax Deed issued. So County cannot transfer title & Tax Deed can’t be done.
- MERP gives her the surviving living in the community spouse full exemption to the MERP claim on property so it’s hers with no claim or lien by Medicaid due to her hubs being Medicaid and she herself isn’t on Medicaid to date. In this scenario, MERP goes away. Do you know if she filed for a full surviving spouse exemption from MERP when she got the NOI right after he died?
OR
- the costs for her to live in the home is so low that staying there - even if MERP won’t do an exemption so there will be an eventual MERP lien/claim looming in the future- is worth paying all taxes, insurance, utilities, repairs, etc. It could be but maybe she’d be better off in a Senior Sec 8 housing unit that’s tied into a community health center. If this is rural land with no mineral rights in the area but more forloined mesquite tree filled scrublands, off of some lonely FM road.... it’s of limited value and can’t be easily sold. I’d fold my losses and walk away, and I say this as someone who is a bit of a risk taker lol.
Her SS or other federal retirement $ cannot be seized by either. If she’s current on her federal IRS tax filing, IRS is happy with her so they cannot attach her monthly income. The irs is a supercreditor and they can attach SS. The Medicaid debt is a debt of her now deceased hubs not hers. The taxes are debts on the property on on her person.
And my last ? to you, what exactly is you alls situation in paying housing costs to your MIL? Really if it’s 3 of you living in the home, then you should be paying 2/3 of costs. You really don’t want someone viewing you as taking advantage of mil. When like a utility bill comes in have mil pay her 1/3 and you pay the other 2/3 seperately. Not into her bank account as it looks like “income” to her but you pay by your own check. Post an update & let us all know how it goes. We do all learn from each other.