Can hospitals/doctors seize/put a lien on your home for medical bills or is that protected?

Question

My partner and I are purchasing a home. I am older and have no health insurance. I want to protect our investment but participate financially in the purchase (down-payment, closing costs and monthly notes) and be included on the title. The note will be in her name. Will this protect either or both of us? Any information or suggestions appreciated.

Answer 1

yes, they can. read your papers carefully.

Answer 2

I would take this question to an attorney and ask them for suggestions on how to deal with such issues.

My (not an attorney) understanding is that a lien can only be placed on your home for something related to the house. You can get a tax lien for not paying your property taxes. You can get a mechanic’s lien for not paying a plumber’s bill. It doesn’t make much sense to my non-legally trained mind that a bill that has nothing to do with your house could entail a lien on it.

However, if you were sued, I would think they could go after your entire estate. An attorney could suggest something like setting up a trust to own the house to protect you in that case.  

Answer 3

Unpaid medical bills can result in a judgment, which will show up on your credit report.  You would have to clear it before a lender would approve a purchase or refinance of a home, or before most any future credit transactions.  

If your friend is the only one on the note, she is the only one responsible for paying it.  Ownership is dependent on the warranty deed alone.  A home you would have an ownership interest in  would have a mortgage on it (or a deed of trust depending on the state where you live) and could be foreclosed if the loan defaults.  You would lose your home in that case, but you would not be responsible for the loan, and the loan and/or default will neither add to nor detract from your credit.  

What you're proposing is fine, as long as it's what you mean to do and her income and credit will support the loan.

In ten years of mortgage underwriting and processing, I've never seen a lien placed by anyone other than a creditor, a home owners association, or the government.  That doesn't mean they can't do it, just that no one whose title commitment I've read had it happen.

Answer 4

Check with an attorney who specializes in asset protection.

Ask the attorney specifically about trusts, and land trusts in particular. (A regular trust might work, but I'm more familiar with land trusts and, in your case, might offer more protection.)

With a land trust, your partner would purchase the property. You certainly could help her with the downpayment and closing costs. Once purchased, she would move the property into the trust. You would be named a co-beneficiary of the trust.

The owner of the property would be the trustee--a third party. (In this way, it differs from a "standard" trust but provides far more asset protection.) The land would be held in the trust. Your partner and you would both be beneficiaries (owners) of the trust. However, wearing a different hat, you and your partner would be renting the home from the trust. The beneficiary documents could be structured in whatever way you wanted--specifying percentage of ownership of the trust (it doesn't have to be 50/50), specifying who's responsible for what, such as monthly payments, and specifying what happens to one of your beneficial interest if the other dies.

If, then, you incurred large medical bills, the hospitals and doctors could still come after you. But you don't own the home; the trustee of the trust does. From that perspective, you're only renting the home. And just as if you were renting from a private landlord, while the hospitals could come after you, they couldn't come after the landlord.

Understand: This structure doesn't protect the property if you or your partner default on the mortgage. The mortgage still has to be paid. You'll pay your rent to the trustee, who then will pay the mortgage. If you don't pay, then the trustee can't pay, and the home will be foreclosed upon.

Also, ask the asset protection attorney whether you should couple the land trust with an LLC. Sometimes that makes sense, too, but I'm not sure it's applicable in your case.

Just make sure you end up talking to a lawyer who really knows and understands asset protection.

Hope that helps.

Answer 5

No one can put a lein on your home except for the mortgage company, a maintenance person (mechanics lein) or any one else you pledge your home as secured property to for the purpose of obtaining a loan.  A doctor or hospital cannot come after you for unpaid bills by trying to secure your home. The extreme situation is if they obtain a court judgement against you, you declare bankruptcy and have to sell the home, the court can take the proceeds and distribute it to your creditors- but that is the most extreme situation.

But don't look for alot of doctors to provide medical services if they will not be paid.  A hospital can refuse to treat you unless it is life threatening.  I would try and get some insurance.  If you can't afford it, buy a smaller house so you can.