After nearly a decade of legislative attempts to update the law of homesteads in Massachusetts, the state passed a comprehensive reform that took effect in March of this year. As the dust settles on changes to procedures for home purchases and refinancing, and for revised practices at the Registry of Deeds and Land Court, we offer an overview of some key changes that may affect the average home owner:
- There is now an automatic homestead protection for $125,000 for each homeowner or couple. This amount of home equity is automatically protected from claims by creditors (with some exceptions). There is nothing to file. This automatically protects the owner(s) for their primary residence in Massachusetts.
- The amount of the general homestead protection made by recording a written declaration with the applicable Registry of Deeds or Land Court District is $500,000. This protection of $500,000 is shared by spouses who own their home together. For joint owners who are not married, the allocation rules have also been clarified. With a written declaration of homestead, $500,000 of equity in a primary residence will be protected from creditors (with some exceptions).
- Homeowners who are elderly (over 62) or disabled (following federal law definitions) and who record a written declaration of elderly/disabled homestead at the applicable Registry of Deeds are entitled to a separate individual $500,000 homestead protection. If there is shared ownership of the home, then the elderly/disabled homestead can be "stacked" or combined with another homestead to increase the total protection to more than $500,000.
- Homes owned by a trust or trusts for beneficiaries who occupy the home as a primary residence now qualify for homestead protection.
- For all mortgage loan closings on a principal residence, closing attorneys must provide you with notice of your right to declare a homestead protection.
- You do not have to re-file a homestead after a refinance. Under the new law, homesteads are automatically subordinate to mortgages, and lenders are specifically prohibited from having borrowers waive or release a homestead.
- All existing homesteads in effect as of March 16, 2011 (the effective date of the new law), continue to be effective and will be governed by the new law.
The Registry of Deeds/Land Court filing fee for a Declaration of Homestead is $35.00 (plus surcharges in some counties).
If you have any questions regarding the new Homestead Act, we are ready to assist you. Please feel free to contact any one of our real estate attorneys at Seegel Lipshutz & Wilchins LLP.
