Massachusetts has made important changes to the Homestead Act that took effect this week on March 16, 2011. The highlights of the new Homestead Act were described in a Prince Lobel Alert dated January 24, 2011 (to read the prior alert, please click here). The new Homestead Act includes provisions that may require additional attention in the conveyance of real property.
Under the new Homestead Act, the equity a Massachusetts homeowner has in his or her principal residence is automatically protected from creditors up to $125,000, and protected to $500,000 if the homeowner records a Declaration of Homestead at the Registry of Deeds. In a major departure from the old statute, proceeds from the sale of the home and insurance proceeds after a casualty are also protected.
Further, the new Homestead Act specifically provides to “non-titled family members … the right to use, occupy and enjoy the home as a principal residence.” These protections extend to a spouse who does not hold an interest of record in the home, even if the property was acquired prior to the marriage, so long as it is the non-titled spouse’s principal residence.
These new provisions for the benefit of non-titled family members require some changes to conveyancing practice for 1 – 4 family residences. In order to ensure that the rights of a non-record family member are documented, the statute requires a Declaration of Homestead to identify each owner benefitted by the homestead and the owner’s non-titled spouse. If there is no Declaration of Homestead, a buyer should at least indicate the grantee’s marital status in the deed to evidence whether others are entitled to the automatic protection.
Any deed of a 1 – 4 family dwelling that is owned by an individual should now state the marital status of the grantor and whether or not the property is the grantor’s (or the grantor’s spouse or former spouse’s) principal residence. In addition, the new Homestead Act provides that to release the homestead rights of the owner’s non-titled spouse (or former spouse residing in the home as a principal residence), he or she must either: (i) join in the conveyance or (ii) execute a separate release of his or her homestead interest.
All existing Declarations of Homestead, in effect as of March 16, 2011, will be grandfathered and governed by the new law regardless of whether the recorded Declaration of Homestead complies with the new execution requirements. Therefore, homeowners who have previously recorded a Declaration of Homestead are not required to execute and record a new Declaration of Homestead to acquire the protections of the increased exemptions and the protection provided to non-titled family members.
If you have questions about any of the information presented here, please contact Robert M. Schlein, Chair of the Real Estate Practice Group at 617 456 8098 or email@example.com, or Jennifer Fleming, Chair of the Estate Planning and Probate Practice Group at 617 456 8058 or firstname.lastname@example.org.