DHHS often sells property owned by people in its care for well below assessed values

This waterfront property in Owls Head, that was valued by the town at nearly $500,000, was sold by the state for $205,000 while its owner was in a psychiatric hospital.
Stephen Betts | BDN
This waterfront property in Owls Head, that was valued by the town at nearly $500,000, was sold by the state for $205,000 while its owner was in a psychiatric hospital.
By Stephen Betts, BDN Staff
Posted Aug. 24, 2013, at 12:45 p.m.

The Maine Department of Health and Human Services routinely sells real estate owned by people in its care for well below their assessed values.

But the department defends its handling of such estates, saying that sales of properties are a last resort, that municipal valuations are not a fair gauge of a property’s worth, and that many of the properties have been allowed to deteriorate leading up to the state being appointed conservator.

A review of conservatorships granted to DHHS by probate courts, county registry of deed records and municipal valuations during the past three years shows a pattern that was first brought to light with a lawsuit filed earlier this year in connection with the January sale of a Rockland man’s home after he was committed to the state-run Dorothea Dix Psychiatric Center in Bangor.

In that instance, the state obtained conservatorship authority over William T. Dean Jr. from Penobscot County Probate Court and ended up selling his waterfront home in Owls Head for $205,000, less than half the $476,840 assessment placed on it by the town for property tax purposes. The state had also tried to sell his Rockland home for less than half its value and hired an auction company to sell off his belongings.

That case was the most extreme example of DHHS approving sales well below their assessed value. There were many other instances found across the state.

In March 2009, the state was appointed conservator for a 68-year-old Kennebunk man after it applied for the status from the York County Probate Court. The state obtained conservatorship because the Kennebunk man was at a rehabilitation center, had accumulated bills in excess of $100,000 at the facility, and officials were concerned that a relative was draining his bank account.

In March 2010, DHHS, as the man’s conservator, sold his ranch-style house — situated on two-thirds of an acre in Kennebunk — for $97,500. The town had the property assessed at $258,700.

The house underwent some renovations after the March 2010 sale. The new owner replaced a deck with stairs, repaired the roof and expanded the septic system, according to the town code enforcement office. There were also interior renovations. The new owner also demolished an old building on the property.

The new owner sold the property in September of that year for $200,000.

In October 2009, the state sought and was appointed conservator over a 78-year-old Rockland woman who had been diagnosed with major mental health illnesses and a serious alcohol addiction. The woman had suffered repeated injuries from falls, had been found wandering around town, and had a blood-alcohol level of 0.34 on one occasion — more than four times the limit in which a person is considered under the influence for driving a motor vehicle.

In June 2011, the state sold the woman’s 1,900-square-foot home located on nearly three-quarters of an acre on Rankin Street in Rockland for $115,000, even though the property was assessed by Rockland at $176,200. The woman had bought the home in 2004 for $157,000.

DHHS was appointed conservator of an 82-year-old Sanford man in June 2010. In October of that year, they sold his ranch-style home located on a quarter-acre of land on Morris Street for $80,000. The town had the property assessed in 2010 at $129,900.

The state obtained a conservatorship in December 2012 of an 85-year-old Fairfield woman who was being cared for at a Belfast rehabilitation center and had accumulated $30,000 in bills at the facility. In May 2013, the state sold the woman’s one-story, 1,046-square-foot house on a third of an acre in Fairfield for $45,000, even though the town had it assessed at $74,300.

In May 2010, a year after getting conservatorship for a Camden woman, the state sold her Camden property for $135,000. The 594-square-foot home, on more than 3 acres on Beaucaire Avenue, was assessed by the town at $152,200.

County probate courts decide whether someone is appointed a conservator, a person who will assume financial control for an individual considered incapable of doing it on their own.

The money from sales is used for future care of the people under state care.

Knox County Probate Judge Carol Emery said there is no requirement that DHHS have an appraisal done on properties of people for whom they are conservators. She said she has in some instances required appraisals or required that a conservator obtain opinions from multiple real estate agents on the value of a property.

She said properties are often sold when the owners have no money to pay property taxes or to maintain the homes.

Emery said it was not surprising that the sale prices for the properties are less than the values placed on them by municipalities for property tax purposes. She said the real estate market is such that people are selling properties for less than what they are assessed.

John Martins, the director of public and employee communications for DHHS, also said that municipal valuations are not a good gauge for determining values.

“In almost all instances the town-assessed value will be higher, as towns use the value to calculate property values and higher values are usually in the town’s best interest,” Martins said.

Rockland Assessor Dennis Reed said that in Rockland, sales of properties are coming in, on average, about 6 percent less than the assessed value he has placed on them.

Martins said it was important to note that the department becomes conservator only as a last resort. This can only occur when there are no other family members or community members able or appropriate to act in this capacity, he said.

“When somebody is judged incapacitated by the court, a long period of neglect [of self and property] has typically taken place. During that time, the condition of house and property can deteriorate rapidly, further reducing its value,” the DHHS spokesman said.

He said the department uses a real estate agent when it is selling property and the listings are public. He said real estate agents have an incentive to get the highest price for a property, since they are paid by commission.

“Anyone, including family, is free to make an offer,” Martins said.

The department has a policy on the disposition of property valued at more than $1,200.

Human services caseworkers will consult with their supervisor and make a recommendation to a program administrator within the department whenever sale of property valued at more than $1,200 is considered. The program administrator will then decide whether the proposal should be forwarded to DHHS’ central office. An asset disposition committee will review and decide whether the sale should occur.

When necessary, the attorney general’s office is consulted with, he said.

In the cases reviewed by the newspaper there were no challenges filed by relatives over the state being named conservator. That is a contrast to the William Dean case, in which his sister and a cousin had tried to prevent the sale of the Owls Head home which had been owned by the Deans’ parents for decades.

The Dean case is pending in Knox County Superior Court.

http://bangordailynews.com/2013/08/24/news/midcoast/dhhs-often-sells-property-owned-by-people-in-its-care-for-well-below-assessed-values/ printed on September 16, 2014