# Health - General (GHG)

## Title 24. Miscellaneous Provisions

### Subtitle 14. Nursing Facility Conversion Grant Program

#### Section 24-1401

(a) In this subtitle the following words have the meanings indicated.

(b) "Facility" means:

  (1)

    (i) A public nursing facility that is wholly owned by and operated under the authority of a county or a municipal corporation, or both; or

    (ii) A nonprofit nursing facility that is wholly owned by and operated under the authority of a nonprofit organization;

  (2) A facility that meets the definition of Sec. 19-1401 of this article; and

  (3) A facility that is licensed by the Department.

(c) "Nonprofit organization" means:

  (1) A bona fide religious organization, no part of the earnings of which inures to the benefit of any individual or is used for any purpose other than the maintenance and operation of the facility, the purchase of equipment to be used in the facility, or the expansion of the facility; or

  (2) An organization:

    (i) That is chartered as a nonprofit corporation and classified by the Internal Revenue Service as nonprofit; and

    (ii) No part of the earnings of which inures to the benefit of any individual or is used for any purpose other than the maintenance and operation of the facility, the purchase of equipment to be used in the facility, or the expansion of the facility.

(d) "Wholly owned" includes leased, if:

  (1)

    (i) The lease is for a minimum term of 30 years following project completion; or

    (ii) The lease agreement extends the right of purchase to the lessee; and

  (2) The lessor consents to the recording, in the land records of the political subdivision in which the facility is located, of a notice of the State's right of recovery, as provided under Sec. 24-606 of this title; or

  (3) The lease agreement is with the State for a State-owned building or State-owned property.

#### Section 24-1402

The Board of Public Works, upon recommendation of the Secretary of the Department, may make grants to qualified applicants for the purpose of converting nursing facility beds to other health care services deemed appropriate by the Department, including the plans, specifications, site improvement, surveys, and applicable architects' and engineers' fees.

#### Section 24-1403

(a) Any county, municipal corporation, or nonprofit organization sponsoring a project under this subtitle may apply to the Department for a State grant to be applied toward the cost of that project.

(b) The application shall be directed to the Secretary of the Department.

(c) On approval of a project and the project plans by the Department, the Secretary shall promptly report the application to the Board of Public Works, together with the Secretary's recommendation that the Board of Public Works make funds available as provided in this subtitle.

#### Section 24-1404

(a) The allocation and use of State funds under this subtitle are subject to the following terms and conditions:

  (1) State funds may be used only for projects approved by the Secretary under this subtitle.

  (2)

    (i) Any federal grant that is available for this purpose shall be applied first to a project approved under this subtitle; or

    (ii) In this subtitle, community development block grants shall be considered as local matching funds and may not be considered as federal grant funds.

(b) A State grant shall provide up to 50% of the eligible cost remaining after the federal grant has been applied, except as provided in subsection (c) of this section.

(c) For projects designated under federal regulations, State plans, or departmental regulations as eligible for poverty area funding, a State grant may cover up to 75% of the eligible cost remaining after any federal grants have been applied.

(d) The amount of the State grant for any project shall be determined after consideration of:

  (1) All eligible applications;

  (2) The total amount of unallocated State funds available at the time the application is received; and

  (3) The priorities of area need established by the Department.

(e)

  (1) No portion of the proceeds of a State grant may be used:

    (i) To further sectarian religious instruction; or

    (ii) In connection with the design, acquisition, or construction of any buildings used or to be used as a place of sectarian religious worship or instruction.

  (2) Upon the request of the Board of Public Works, the applicant shall submit evidence satisfactory to the Board of Public Works that none of the proceeds of the grant have been or are being used for a purpose prohibited by this subtitle.

#### Section 24-1405

(a) The Board of Public Works shall make allocations from funds available under this subtitle in accordance with this subtitle.

(b) The Board of Public Works shall certify the allocations to the proper State officers, and the Treasurer shall make payments to the applicant, when needed, for the construction, acquisition, renovation, or equipping of a facility.

(c) The Board of Public Works may adopt regulations for receiving and considering applications and for disbursing funds to applicants.

#### Section 24-1406

(a) In accordance with this section, the State shall have the right to recover funds disbursed under this subtitle.

(b) In the event of failure to complete a project or failure to commence operation of a facility, the State may recover from the recipient of the funds disbursed for the project or facility or from the owner of the property an amount equal to the amount of State funds disbursed for the project, together with all costs and reasonable attorneys' fees incurred by the State in the recovery proceedings.

(c) The State may recover from either the transferor or transferee or, in the case of a property that has ceased to be a facility, from the owner, an amount bearing the same ratio to the then current value of so much of the property as constituted an approved project as the amount of the State participation bore to the total eligible cost of the approved project, together with all costs and reasonable attorneys' fees incurred by the State in the recovery proceedings, if, within 30 years after completion of a project, a property for which funds have been paid under this subtitle:

  (1) Is sold or transferred to any person, agency, or organization that would not qualify as an applicant under this subtitle, or that is not approved as a transferee by the Board of Public Works; or

  (2) Ceases to be a facility as defined in this subtitle.

(d)

  (1) Before the State makes any funds available for an approved project, the Department shall cause a notice of this right of recovery to be recorded in the land records of the county or Baltimore City in which the property is located.

  (2) The recording of the notice:

    (i) Does not create a lien against the property; but

    (ii) Shall constitute notice to any potential transferee, potential transferor, potential creditor, or other interested party of the possibility that the State may obtain a lien under this subtitle.

(e)

  (1)

    (i) The Secretary of the Board of Public Works may authorize the Department to file a civil claim, in the circuit court for the county or Baltimore City in which the property is located, against the owner of the property and any other interested parties, including any transferor that the State wishes to make a party if:

      (1) A failure to complete the project or commence operations of the facility as described in subsection (b) of this section has occurred;

      (2) An alleged sale or transfer as described in subsection (c) of this section has occurred; or

      (3) A property is alleged to have ceased to be a facility as defined in this subtitle;

    (ii) The claim shall be filed with:

      (1) Sworn affidavits stating facts on which the allegations of default are based; and

      (2) A detailed justification of the amount claimed.

  (2) If the circuit court determines from the State's initial filing that there is probable cause to believe that a default has occurred, pending full determination of the State's claim, the court shall authorize a temporary lien on the property:

    (i) In the amount of the State's claim plus any additional amount estimated to be necessary to cover the costs and reasonable attorneys' fees incurred by the State; or

    (ii) In other amounts that the court determines to be reasonable.

  (3)

    (i) A temporary lien shall take effect:

      (1) On the date of the court's authorization, if the Secretary of the Board of Public Works records a notice of temporary lien in the land records of the county or Baltimore City in which the property is located within 10 days after the court's authorization; or

      (2) On the date a notice of temporary lien is recorded.

    (ii) While the temporary lien is in effect, the owner or any person who acquired an interest in the property after the State first made funds available in connection with the property may not without the prior written consent of the State:

      (1) Take any action that would affect the title to the property; or

      (2) Institute any proceedings to enforce a security interest or other similar rights in the property.

  (4)

    (i) The owner of the property or any other interested party may obtain release of a temporary lien at any time by filing with the court a bond securing the payment in full of the State's claim and any additional amount necessary to cover the costs and reasonable attorneys' fees incurred by the State.

    (ii) The owner or other interested party may cause the release to be recorded in the land records.

(f) Proceedings to determine the State's right to recover and the amount of its recovery under this subtitle shall have priority over other civil proceedings in the circuit courts.

(g)

  (1)

    (i) At the conclusion of full adversary proceedings on the issue of default and of any disputes over the amount of the State's recovery, the circuit court shall, if it finds that a default has occurred, issue a final judgment for the amount it finds to be recoverable by the State.

    (ii) All parties involved in the default, including in every case the owner of the property, shall be held jointly and severally liable to the State for the amount of the judgment.

  (2)

    (i) Except as the State may otherwise provide by a written subordination agreement, if the amount of the final judgment remains unpaid after 30 days following the court's final order, the final judgment shall constitute a lien on the property, superior to the lien or other interest of a mortgagee, pledgee, purchaser, or judgment creditor whose interest became perfected against third persons after the State first made funds available under this subtitle.

    (ii)

      (1) Except as provided in subsubparagraph 2 of this subparagraph, a lien takes effect on the date a notice of lien is recorded.

      (2) A lien takes effect on the 31st day following the court's final order if the Secretary of the Board of Public Works records a notice of lien in the land records of the county or Baltimore City in which the property is located on or before the 41st day following the final order.

    (iii)

      (1) At the time that a lien takes effect, any temporary lien then in effect shall be automatically and fully released.

      (2) The recorded notice of a lien shall constitute notice of the release of a temporary lien.

    (iv) A lien imposed under this subsection may be enforced and foreclosed in accordance with the procedures prescribed in the Maryland Rules, except that neither the State nor any agent appointed by the State to sell the property need file a bond.

  (3)

    (i) The owner or any other interested party may obtain release of a lien at any time by paying to the State the full amount of the judgment rendered by the circuit court, together with interest from the date of judgment.

    (ii) On payment in full, the Secretary of the Board of Public Works shall cause a release to be recorded in the land records.

  (4) If the circuit court finds that there has been no default or if the full amount of the court's judgment is paid to the State within 30 days after the court's final order, a temporary lien then in effect shall be released immediately and the Secretary of the Board of Public Works shall cause the release to be recorded in the land records.

(h)

  (1) All funds recovered as a result of this right of recovery shall be deposited in the Annuity Bond Fund and applied to the debt service requirements of the State.

  (2) If the Board of Public Works determines that there is good cause for releasing the transferor, transferee, or owner from the obligation imposed under this subtitle, the Board of Public Works may waive the State's right of recovery under this subtitle.

#### Section 24-1407

(a) A temporary delicensure of licensed bed capacity of a facility under this subtitle does not require a certificate of need review.

(b) The Maryland Health Care Commission shall retain the bed capacity of a facility on its inventory for up to 2 years, provided that the owner or licensed operator of the facility provides written notice to the Commission at least 30 days before the proposed temporary delicensure.

#### Section 24-1408

The Department, in consultation with the Maryland Health Care Commission and the nursing home industry, shall adopt regulations to implement the provisions of this subtitle.

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Md. Code Ann., Health-Gen. (as displayed at mgaleg.maryland.gov, October 16, 2026)