Legal Q & A: Recovery of Welfare Assistance

The first duty of welfare officials is to provide financial assistance to anyone in town who "is poor and unable to support himself … whether or not he has a residence there." RSA 165:1. But an important secondary duty to the taxpayers of the town is, where practical, to recover money expended to assist eligible applicants. As recently as 1975, the New Hampshire Supreme Court cited the view that Old Age Assistance (OAA) "is in the nature of a loan to be allowed as a claim against the recipient's estate…." In re Estate of Harville, 115 N.H. 480, 482 (1975), quoting State v. Lipnick, 115 N.H. 217, 219 (1954). To be sure, it is often impossible to recover for welfare expenditures, but welfare administrators and selectmen should be aware of the law so that they can take appropriate action when there is an opportunity for collection.

Q. In what ways can the town recover sums that have been expended for general assistance?

A. RSA Chapter 165 provides for recovery of general assistance payments from various parties under certain conditions:

Legally liable relatives, RSA 165:19 – :20
Municipality of residence, RSA 165:20
Recipient, RSA 165:20-b
State of New Hampshire, RSA 165:20-c
Estate of recipient, RSA 165:27
Liens on real property owned by recipient, RSA 165:28
Liens on inheritances, property settlements or civil judgments for personal injuries, RSA 165:28-a

Q. What is involved in collecting from the assisted person's relatives?

A. Well, at least for the time being, the legislature has made it very difficult. RSA 165:19 provides:

The relation of any poor person in the line of father, mother, stepfather, stepmother, son, daughter, husband, or wife shall assist or maintain such person when in need of relief. Said relation shall be deemed able to assist such person if his weekly income is more than sufficient to provide a reasonable subsistence compatible with decency and health.

If a legally liable relative declines reimbursement, RSA 165:20 provides that the town may bring a civil action against the relative to collect such sums as the court determines the relative can afford to pay. Note, however, that in 2009 the legislature suspended the effectiveness of RSA 165:20 through June 30, 2011 and, for some reason, has done so again through June 30, 2013. Laws of 2011, Chapter 224:327. Thus, no municipality may sue to recover from legally liable relatives, at least until July 1, 2013.

Even when RSA 165:20 is operative, it is not easy to collect from legally liable relatives. Several early decisions of the New Hampshire Supreme Court have stressed that responsible relatives are not required to pay unless they have surplus income. Nonetheless, the welfare administrator should routinely obtain information concerning legally liable relatives during the application process and should not hesitate to contact a legally liable relative who has the means to pay. At least until July 2013, legal action should not be threatened or commenced under RSA 165:20.

Q. How about recovery from the town where the assisted person resides?

A. The power to collect from the town of residence has been curtailed, too, by the suspension of RSA 165:20 through June 30, 2013. In any event, this means of recovery is of limited applicability. Residency can be formed instantaneously, so the assisted person will often be the responsibility of the last city or town to receive an application. But, when the occasion arises, welfare officials are entitled to reimbursement for a client who actually has a residence in another town. If a dispute does arise between communities regarding who is responsible for assistance provided, RSA 165:20-a provides a voluntary arbitration system, administered by the New Hampshire Department of Health and Human Services, to resolve the issue. Just don't threaten or commence legal action until July 1, 2013.

Q. When can the town collect from welfare clients themselves?

A. The authority to seek recovery from assisted persons by civil action is found in RSA 165:20-b, which has not been suspended. The town is entitled to recovery only if and when the individual "is returned to an income status" and can pay it back "without financial hardship." In addition, under RSA 165:27, recovery is authorized from an assisted person's estate, provided there is no surviving spouse or minor children, and RSA 165:28-a gives municipalities a priority lien on sums that an assisted person may receive by inheritance, property settlement or civil judgment for personal injury. The municipality may enforce the lien by an equitable action in superior court. RSA 165:29.

Q. Isn't the real estate lien the best hope of recovery?

A. Yes. Applicants for assistance are required to use available liquid assets for their support. However, they cannot reasonably be required to sell their houses to qualify for assistance, and other real estate typically cannot be sold immediately. RSA 165:28 is designed to help municipalities recover in these situations. Applicants who own real estate should be told that a notice of lien will be recorded in the registry of deeds. The lengthy statute provides:

The amount of money spent by a town or city to support an assisted person under this chapter shall, except for just cause, be made a lien on any real estate owned by the assisted person. The liens are effective until enforced as provided in this chapter, or until released by the selectmen or city council; provided that there shall be no enforcement of the lien so long as the real estate is occupied as the sole residence of the assisted person, his surviving spouse, or his surviving children who are under age 18 or blind or permanently and totally disabled. Interest at the rate of 6 percent per year shall be charged on the amount of money constituting such lien commencing one year after the date of the filing of the lien unless a majority of the selectmen in the town or the councilmen in the city vote to waive such interest. The selectmen or council may file a notice of the lien or an acknowledgment of satisfaction of the lien with the register of deeds of the county in which the assisted person owns real property. A notice of lien which contains the owner's name and a description of the real property sufficient to identify it is a valid lien on the property. The register of deeds shall keep a suitable record of such notices without charging any fee therefor, and he shall enter an acknowledgment of satisfaction of the lien upon written request of the selectmen or the council without fee.

The notice of lien is, of course, a limited exception to the laws requiring confidentiality of welfare records. It is simple to prepare and may be filed with the register of deeds with no fee. The notice must state its purpose, the assisted person's name and an adequate description of the property subject to the lien. No amounts or other details of the case should be stated.

Note that the lien can and should be imposed on any nonresidential real estate owned by the recipient, as well as the homestead. Interest at six percent per annum accrues on unreimbursed amounts starting one year after the notice is recorded.

Unfortunately, the welfare lien does not have the superpriority of the property tax lien. The welfare lien is subject to previously recorded liens. RSA 165:30. In the event of foreclosure of a previously recorded mortgage, the welfare lien will be wiped out, and the municipality will receive payment only if the foreclosure sale has produced a surplus to pay junior lienors, in order of priority, after satisfaction of the debt owed to the mortgagee.

The welfare lien takes precedence over subsequently recorded liens. Under the similar statutory lien for Old Age Assistance (now RSA 167:14), where a creditor recorded an attachment shortly after the OAA notice of lien was recorded, the Supreme Court held that the OAA lien created priority for assistance paid both before and after recording of the creditor's lien. State v. Lipnick, 99 N.H. 217 (1954).

Unless the lien is voluntarily paid to clear title to the property, ultimate enforcement of a welfare lien is by a "bill in equity" in superior court. RSA 165:29. The typical form of equitable relief is an injunction, but sums of money can also be collected in equity cases. If necessary, a judgment is collected by a writ of execution and a sheriff's sale of the property. RSA 527; RSA 529. Contact your regular municipal attorney if litigation is necessary.

Q. How long can the town wait before attempting to recover for welfare assistance?

A. RSA 165:25 provides: "Actions by towns and cities to recover the expense of support, return to his home, or burial of a poor person may be brought within 6 years after the cause of action accrued and not afterward." Like other statutes of limitation, its purpose is "to require prompt presentation of a claim while the facts are still capable of ascertainment." Milton v. Wolfeboro, 103 N.H. 174, 176 (1961). Six years is more generous than the usual three-year statute of limitations for contracts or torts, but, in a prolonged case, welfare administrators should keep the statute in mind and assume that the six-year limit will apply from the date of each payment as it is made. Similarly:

  • Recovery from an estate under RSA 165:27 incorporates the procedure for counties under RSA 166:19, which limits recovery to amounts paid within six years preceding death.
  • Recovery under the lien for inheritances, property settlements or civil judgments for personal injuries is limited to assistance paid within the previous six years. RSA 165:28-a, II.

Q. Does the six-year limitation apply to welfare liens on real estate?

A. The language of RSA 165:28 (see text above) is not entirely clear, and there is no New Hampshire Supreme Court case on point. The liens are effective "until enforced as provided in this chapter [RSA 165]." Of course, that begs the question, because other sections in the chapter provide that enforcement is by action in the superior court, subject to a six-year statute of limitations. However, no enforcement is allowed as long as the property is occupied as the sole residence of the recipient or surviving spouse or minor disabled children. These provisions were added by Laws 1988, Chapter 180 (Senate Bill 278). The question is: does the lien expire in the case of prolonged occupancy of this kind?

The legislative history of 1988 Senate Bill 278 is helpful. The original version of RSA 165:28 (almost identical to current RSA 166:20, relative to county assisted persons) provided that, unless enforced sooner by court action, the lien expired at death, and recovery was supposed to be made from the recipient's estate. Laws 1965, Chapter 42:1. In practice, however, most liens were paid to clear title when the property changed hands after the recipient's death. SB 278 was intended to formally extend the effectiveness of the lien beyond death. A second purpose was to soften the impact by delaying enforcement during the occupancy of the surviving spouse and disabled minor children. Thus, it appears that the intent of the 1988 amendment was to extend the period of enforceability of the lien to allow collection beyond six years when necessary to prevent ouster of the recipient and immediate family from occupancy of the homestead.

Local officials in NHMA-member municipalities may contact LGC's legal services attorneys for more information on this and other topics of interest Monday through Friday 8:30 a.m. to 4:30 p.m. by calling 800.852.3358, ext. 384. School officials should contact the New Hampshire School Boards Association attorney at 800.272.0653.