TENNANT & EWER, P.C.

IS YOUR HOME PROTECTED?

THE MASSACHUSETTS HOMESTEAD ACT

 

An Estate of Homestead is a type of protection for a person’s residence. It allows homeowners in Massachusetts to protect up to a certain value of their primary residence, per family, from general creditors. Massachusetts’ homestead law provides a two-tiered system of protection for homeowners’ equity: an automatic $125,000 exemption and enhanced protection up to $1,000,000 exemption for those who file a Declaration of Homestead. For homeowners, particularly those with significant equity or potential exposure to unsecured creditor claims, proactively recording a homestead declaration remains a valuable risk management tool. The homestead is one of the least expensive asset-protection tools available in Massachusetts: there is minimal recording fee, no ongoing maintenance, no annual renewal, and no adverse tax consequences. For most homeowners, there is little downside and substantial upside to recording a Declaration of Homestead.

Some of the highlights of the Act are:

  • Automatic homestead exemption of $125,000.00 for every homeowner in Massachusetts.
  • Maximum regular homestead exemption of $1,000,000, one of the largest in the country. (This type of homestead requires a Declaration of Homestead to be declared and recorded with the registry of deeds for the county in which the property is located..)
  • No need to re-declare a homestead exemption after refinancing.
  • Availability of homestead exemptions for properties in trust.
  • Elimination of the pre-existing debt exclusion.
  • Protection by Declaration for proceeds from the sale of a home for up to 1 year.
  • Protection by Declaration for proceeds from a fire or other casualty loss for up to 2 years.
  • Homeowners who are age 62 or older or legally disabled may each be entitled to separate homestead exemptions, potentially increasing the total protected equity when multiple qualifying owners reside in the same property.
  • Closing attorneys must inform borrowers about the automatic homestead protection and provide borrowers the opportunity to declare a $1,000,000 Homestead Declaration.