On December 16, 2010 Governor Patrick signed a comprehensive revision of the Massachusetts homestead law. This new law provides radical changes to the current homestead law. It will take effect March 16, 2011. Below is a summary of the changes:
- With the new law, every Massachusetts homeowner will automatically have $125,000 of creditor protection for the equity in their principal home, regardless of whether a homestead declaration is filed.
If multiple owners of such real estate own their property as joint tenants or tenants by the entirety, they will each have an automatic Homestead of $125,000 but the aggregate will be capped at $125,000. Multiple tenants in common and beneficiaries of trusts have the $125,000 automatic Homestead allocated in accordance with their percentage interest.
- Homeowners may also obtain a “declared homestead exemption” of up to $500,000 by filing a written declaration at the registry of deeds.
Joint tenants and tenants by the entirety each receive the individual protection of $500,000 but their aggregate protection is capped at the $500,000. Tenants in common who file such a declaration receive protection in the amount of $500,000 multiplied by their percentage interest in the property.
- Any existing homestead (recorded prior to the enactment of the new law) will automatically be considered “declared homestead exemptions” under the new law, without having to do anything.
- For married couples, both spouses now have to sign the form.
- The new law requires the homestead to identify each co-owner to benefit from the homestead (plus the owner’s “non-titled spouse”) and the declaration must state under the penalties of perjury that each person so named intends to occupy the home as their principal residence.
- If you have a homestead as a single person and get married, the homestead automatically protects your new spouse. Homesteads now pass on to the surviving spouse and children who live in the home.
- Transfers among family members will not terminate a previously declared homestead even if the homestead is not reserved in the deed.
- The law provides protection to those who have put their home in a trust, provided that the home is, in reality, the beneficiaries’ principal residence.
- The existing “elderly and disabled” homestead will remain available at $500,000.
- You do not have to re-file a homestead after a refinance. Homesteads are automatically subordinate to mortgages and lenders are specifically prohibited from having borrowers waive or release a homestead.
- Homestead may be declared on two to four family homes, condominium units, co-operative housing and manufactured homes.
- Provides homeowners with additional protection for insurance proceeds acquired from the loss of property due to casualty. In the event of casualty, protection runs until repair is completed, a new home is acquired or two years, whichever occurs first.
- Provided homeowners will additional protection for proceeds derived from the sale of a property which was subject to a Homestead. Sale proceeds are now protected until another home is acquired as a principal residence or one year from the sale date, whichever occurs first.
- Closing attorneys in mortgage transactions must now provide borrowers with a notice of availability of the “declared homestead exemption.”
Now that the protections are enhanced and attorneys are obligated to disclose the availability of the homestead, every homeowner should opt to declare a homestead. Having homestead protection is one of the wisest investments any homeowner can make.
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Tags: attorney staphanie konarski, estate planning, governor patrick homestead revision, Massachusetts homestead laws, real estate laws
