Homestead Protection Act Massachusetts
If you are considering purchasing a Massachusetts home one of the things you may be asked at some point, more than likely by your attorney or even possibly by the bank’s attorney, is whether you would like to have Massachusetts Homestead Protection.
Folks this is one easiest Real Estate decisions you could have make! Raise your hand immediately and say you want it. The homestead declaration is one of the most important types of insurance you can have on your home!
What an estate of homestead does is protect a persons residence from most creditors. The Massachusetts declaration of homestead protects the equity in your property for up to $500,000 in the event a lawsuit is brought against you. So if you are sued, $500,000 of your equity could not be touched by an attachment and subsequent levy on execution of sale. As most people realize, we live in a litigious society. The chances of getting into an accident and someone suing you should not be taken lightly! It happens to quite a few people everyday. Massachusetts homestead protection is something no homeowner should do without!
The Homestead protection document is filed at the registry of deeds in the county that your residence is located in. All that is needed is the preparation and recording of a Declaration of Homestead as well as the payment of a state recording fee. The total cost is usually only around $100 to prepare and record the document. I am sure your attorney would be happy to prepare this document for you or possibly even the banks attorney if you don’t have legal representation at your closing.
If you are married the document only needs to be filed by one person and the other spouse is protected too. Most of the time the Massachusetts homestead is filed at the registry with all the rest of the closing documents when buying a home.
There are some things however that the Massachusetts homestead declaration does not protect against.
The following are exempt from the Homestead Law
- Federal, state and local taxes, assessments, claims, and liens.
- Mortgages used to purchase the residence, and in the case of the elderly homestead, first and second mortgages held by financial institutions or others.
- An execution issued from the Probate Court to enforce its judgment that a spouse pay for the support of a spouse or minor children.
- Where buildings on land not owned by those declaring of a Homestead estate are attached, levied upon or sold for the ground rent of the lot whereon they stand.
- Upon an execution issued from a court of competent jurisdiction to enforce its judgment based upon fraud, mistake, duress, undue influence or lack of capacity.
- Debts established prior to the acquisition of the Massachusetts homestead.
The Massachusetts Homestead protection only extends to one primary residence. You can not have homestead protection on multiple properties that you own.
In 2010 Homestead Protection in Massachusetts Was Revised
Massachusetts made some additional upgrades and improvements to the original homestead protection law in 2010. The changes in Homestead protection further enhanced what was already in place.
The change in Mass Homestead Law was filed on January 2nd 2010 and is known as House Bill No.1584. Below is a summary of the changes that took place:
Automatic Homestead. Home owners in Massachusetts are now automatically provided with protection up to $125,000 for equity in their property regardless of whether a Homestead declaration has been filed or not. Homeowners who record a homestead declaration would have their protection increased up to $500,000 for the equity in their home.
Signature. There was a prior flaw in the homestead protection statute for Massachusetts that said only one of the owners may file a homestead in any home. Under the old statute, joint owners, including spouses, had to decide which of them was more likely to have liability for a claim that is not covered by insurance or who was more likely to get sued. The current statute allows both spouses to file, even if only one spouse is named on the title.
Second Homestead.Under the new homestead statute, a second homestead filing would relate back to the date of the first filing. This would protect against liability incurred between the two filings that could compromise the second declaring parties equity. Most see this as an improvement to how the homestead protection was intended to work.
Trust. Completely changing the previous statute, the new Bill provides protection to beneficiaries of trusts that hold title to the residence, provided that the home is, in reality, the beneficiaries’ principal residence.
Transfer of Title Between Spouses and Co-owners. Previously in the old statute, spouses or co-owners who transferred title between themselves without explicitly retaining homestead rights inadvertently terminated their right to protection. Under the new homestead protection act, transfers among family members will not terminate a previously declared homestead even if the homestead is not reserved in the deed.
Home Sale Proceeds. Under the previous homestead protection law there was no protection for homeowners who sell their home and do not immediately reinvest the proceeds in a new principal residence. With the current revision now in place, proceeds from the sale of a home would be protected for up to a year and two years for casualty/insurance proceeds.
Mortgage. Lastly, the new modification would prohibit mortgage lenders from requiring homeowners to terminate their homestead rights in order to secure a mortgage.
One other minor addition: It is now required that closing attorneys offer Massachusetts homestead protection to home buyers.
Getting homestead protection is one of the wisest investments a home owner can make! Do yourself a favor and make sure you get this type of cheap insurance policy. Homestead protection is something I never forget to bring up to my real estate clients.
Other Massachusetts Homestead Protection Resources Worth Reading:
- Questions and answers to some of the most popular topics surrounding the Massachusetts Homestead Protection Act via The Secretary of The Commonwealth of Massachusetts.
Use these additional homestead protection law resources to educate yourself on any unanswered questions you may have.
About the author: The above Real Estate information on Massachusetts Homestead Protection was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at [email protected] or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 27+ Years.
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