The new homestead law in Massachusetts which takes effect March 16, 2011, enables all homeowners to automatically receive a homestead exemption of $125,000 and to obtain a $500,000 “declared homestead exemption” of $500,000 by filing a written declaration at the applicable registry of deeds. The new law also allows homesteads to be declared on property held in trust and clarifies that there is no need to refile after refinancing. (From Massachusetts Law Updates from the Massachusetts Trial Court Law Libraries). For more information visit: masslawlib.blogspot.com
Please note that this post is not meant to give legal advises in any way or to describe in any detail on the topic of homestead law. There are myriads of other incidental protections and technical requirements and rules modifying the general protection as described within this post. If you have any questions regarding how homestead law might affect you or your home, please contact an attorney or visit the Registry of Deeds website.
Massachusetts homestead law's aim is to protect the homeowner from creditors certain amount of equity from her primary residence. From this seemingly simple principle, homestead law gets quite technical in its application. The following is a quick and general overview of the scope of the law.
Perhaps the easiest place to start is to understand what the law does not protect. Among other things, homestead law does not protect against debts of the homeowner that are: Federal, state, and local taxes, assessments, claims, and liens; liens recorded prior, to the creation of the declaration of homestead; mortgages; orders of court for support; or a court order otherwise enforcing a judgment notwithstanding the hometead protection.
The new homestead law expands and clarifies the protection of the prior law. For example, the new law is gender-neutral, in keeping with Massachusetts's new marriage law.
Under the new law, a homeowner enjoys an automatic homestead protection of $125,000.00 equity in her primary residence upon recording the deed. That is, if a homeowner has recorded or registered the deed following a purchase of her home at any point (whether before the law becomes effective or after) as long as she meets all the other requirements of the law, she will enjoy the automatic protection. She may separately record in the registry of deeds a declaration of homestead, upon which she enjoys up to $500,000.00 of protection. Co-owners with some important exceptions share the amount of protection allowed, whether under the automatic protection or declaration.
In addition, an elderly (statutorily 62 years-old or older) and/or disabled homeowner may file a separate declaration which avails them an extra protection. This is what is commonly referred as stacking. Unlike the general homestead declaration, co-owners may not share the amount of this protection.
As mentioned above, because of the technical and expanded nature of the new law, the new law may pose some challenges even during a simple transaction of real estate. As always, a prospective purchaser will want to be certain that the title can be taken without any prior liens on the property when possible. In addition, the purchaser will want to be sure how she intends to take title, with whom and in what manner, etc., because this decision may have lasting consequences in regards to the homestead law.