The federal government, through the provisions of numerous Federal Statutes, such as Title 42, USC – and the Hill-Burton Act, 42 USC Section 291 to be specific – may make grants to assist in the construction or modernization of public or other nonprofit hospitals and medical facilities. Such funds may generally be recovered by the government by the original applicant or his or her assigns/transferees should it be determined that the initial owner or subsequent transferee violate the initial conditions under which the funds were given. Such circumstances include the following:
• Facilities are not used for purposes as provided for under the act/statute(s) authorizing the funds
• The owner does not qualify for federal funding
• Facilities are used for religious worship.
The right to recover federal funds is not required to be secured by a lien on the property, nor is notice of the right to recovery required to be reflected in the chain of title to the real property. Therefore, when insuring a transaction for a nursing home or hospital, inquiry must be made to ascertain if federal funds were used in the construction or improvements of the facilities. If determined that federal funds were used, an exception must be made as to the rights of the United States to recover any federal funds advanced as provided under such Act.