The Massachusetts Homestead Law provides limited protection against the seizure and forced sale of your principal residence (including condo units and mobile homes) in recompense for unsecured debts such as credit card and student loan debt, medical bills, and utility bills. It does this by providing an exemption up to a certain dollar amount of equity (amounts over the existing mortgages) that a creditor can either attach for security before trial or seek to have sold in order to satisfy a judgment. The protection also applies to the proceeds, up to the dollar amount and/or up to one year, if the property is sold.
Everyone Should File
All homeowners should record a Declaration of Homestead because of the protection it affords. Even people who are not titleholders to their principal residence (such as the spouse of the record owner if the title is held in one name) should also file their own declaration. The new statute now also permits persons who hold title to their residence in a trust to file.
There are three types of homestead protection:
- Automatic: All principal residences in Massachusetts are automatically protected up to $125,000 without any action by the owner.
- Declared: A principal residence may be protected up to $500,000 if each owner declares homestead protection by signing and filing a “Declaration of Homestead” at the Registry of Deeds.
- Personal: Owners of principal residences who are 62 or older (defined as “elderly” under the statute) or disabled are entitled to protect an additional $500,000 in equity (up to $1,000,000 total) if they file the appropriate declaration.
Whom Does Homestead Protect?
The Homestead Law benefits each owner named on the Declaration of Homestead and each of the owner’s family members who occupy the home as their principal residence. The law also protects a spouse who is not listed as a homeowner, including when the other spouse already declared a homestead on his or her home before marriage.
Automatic and declared homestead protection is not affected by death or divorce of the owner. The protections continue to apply to a deceased owner’s surviving spouse and minor children who reside in the home, and will continue to apply despite the remarriage of the surviving or former spouse. This is true even when an owner who is 62 or older or disabled dies. If the surviving spouse is not 62 or older or disabled, and did not otherwise declare homestead, then the surviving spouse continues to have the benefit of the declaration previously recorded until he or she turns 62 or becomes disabled and declares the applicable homestead.
For years, homeowners associated filing a Declaration of Homestead with financial insolvency or bankruptcy. The expanded statute in 2011 renders this stigma unfounded. Homestead declarations do not appear on credit reports and serve only to provide an extra level of protection for homeowners. They involve no real downside, making the decision an easy and obvious choice.
To find out more about how Prince Lobel can help you file a Declaration of Homestead, or can help with other homeowner issues, please contact Stephanie Haughey, the author of this alert, at shaughey@princelobel.com or 617.456.8053, or Rob Schlein, the chair of Prince Lobel’s Real Estate Practice Group, at rschlein@princelobel.com, or 617.456.8098.