Potentially. Medicaid doesn't exactly “come after” the condo. Instead, it could impose a period of ineligibility for benefits based on an uncompensated transfer of assets.

You might argue that the transfer is compensated since your wife lent the money to her mother. The question is whether you can prove that the spending was a loan. To the extent that there's evidence that your mother-in-law was obliged to repay your wife, it won't be treated as uncompensated.

A local elder law attorney should be able to advise you as to how this type of situation is viewed by your Medicaid agency.