The Homestead Act
Massachusetts General Laws, Ch. 188, §1-10
1) What is a Declaration of Homestead/Homestead Protection?
An estate of homestead is a type of protection for a person’s principal residence. There is an automatic homestead protection of one hundred and twenty-five thousand dollars ($125,000) with respect to a home that does not declare a homestead exemption with the Registry of Deeds. In order for homeowners in Massachusetts to protect up to five hundred thousand dollars ($500,000) per residence, per family, you must file a document called a “Declaration of Homestead”. The form is filed at the Registry of Deeds in the county or district where the property is located, referencing the title/deed to the property.
2) Who can file a Homestead protection?
The owner or owners of a home who occupy or intend to occupy the home as a principal residence may file a homestead protection. A sole owner, joint tenant, tenant by the entirety, tenant in common, life estate holder, or holder of a beneficial interest in a trust may all be regarded as owners. With respect to a home owned by joint tenants or tenants by the entirety, the homestead exemption remains whole and unallocated between the owners. If there are more than two (2) joint tenant owners, there is ability to add an additional two hundred and fifty thousand dollars ($250,000) to the exemption amount for additional joint tenants when one of the joint owners is elderly or handicapped. With respect to a home owned by multiple owners as either tenants in common or as trust beneficiaries, the homestead exemption shall be distributed among the owners in proportion to each of their ownership interests. Manufactured or mobile home owners are also eligible to declare homestead protection under the provisions of the new statute.
3) My home is held in trust, am I entitled to a Homestead protection?
Yes, effective March 16, 2011, a holder of a beneficial interest in trust is considered an “owner,” eligible for an estate of homestead. If your home is owned in trust, only the trustee shall execute a declaration of homestead on behalf of the trust’s beneficiaries. The trust declaration and or trustee certificates also needs to be recorded at the Registry of Deeds. In the declaration of homestead, the trustee must identify each of the beneficiaries to the trust (who must be natural persons) that occupy or intend to occupy the premises as their principal residence. The spouses, if any, of any resident beneficiary must also be identified and each must state whether they also occupy or intend to occupy the premises as their principal residence.
4) Where do I file my Homestead?
Each homestead must be filed in the county or district Registry of Deeds in which the residence is located. To acquire a homestead for a mobile home, you must file at the Registry of Deeds in which the mobile home is located, also. The Registry of Deeds must file your manufactured home declaration even though you do not have a deed on record.
5) How am I protected?
The real property or manufactured home which serves as an individual’s principal residence upon filing a declaration of homestead shall be protected. A principal residence is considered to be the primary dwelling where an owner, and their family if applicable, reside or intend to reside. The declared estate of homestead shall protect against attachment, seizure, execution on judgment, levy or sale for the payment of debts to the extent of five hundred thousand dollars ($500,000) per residence, per family.
The declaration of homestead shall benefit each owner named on the homestead and each of the owner’s family members who occupy or intend to occupy the home as their primary residence. Each family member shall have the right to use, occupy and enjoy the home. The new law provides additional protections to spouses that are not listed as owners in their principal residences. For example, protection extends automatically to a new spouse where an unmarried person declared a homestead and later marries. Also, divorcing spouses and minor children are protected against the loss of homestead through termination or divorce. Neither divorce nor remarriage will affect the homestead of the spouse and minor children who still primarily resides in the home.
6) How am I protected if I am 62 or older, or disabled?
The real property or manufactured home of persons sixty-two (62) years of age or older or of a disabled person, regardless of age, shall be protected against attachment, seizure, execution on judgment, levy or sale for the payment of debts.
Real property or manufactured homes must serve as an individual’s principal residence and each individual filing as either elderly or disabled will be eligible for protection up to a maximum amount of five hundred thousand dollars ($500,000) regardless of whether such declaration is filed individually or jointly with one another. Elderly persons, regardless of marital status, will be personally exempt up to five hundred thousand dollars ($500,000) each. If two (2) owners qualify for the elderly or disabled homestead protection, the aggregate protection on the home shall be one million dollars ($1,000,000).
Take note, each elderly or disabled homestead protection shall terminate upon the person’s death. If there are multiple owners and only one qualifies for an elderly or disabled homestead protection, it may be advisable to file one homestead declaration per owner in order to protect the family’s right to use, occupy and enjoy the home.
7) What does the Homestead law mean by a “disabled person”?
A disabled person is defined as an individual who has any medically determinable permanent physical or mental impairment that meets the disability requirement of supplemental social security income. In most cases, an individual is considered disabled – for the purpose of this law – if he or she cannot engage in any gainful activity as a result of the physical or mental impairment.
If you are declaring a homestead to benefit a disabled person, either an original or certified copy of the disability award letter issued by the United States Social Security Administration, or a certification letter signed by a licensed physician registered with the Massachusetts Board of Registration in Medicine must be attached to the homestead form. Disabled persons must meet the disability requirements stated in 42 U.S.C. 1382c(a)(3)(A) and 42 U.S.C. 1382c(a)(3)(C) as in effect at the time of recording.
8) Are my spouse and children covered, should I pass away?
Yes. Should the parent who declares the homestead die, the law protects the family’s right to use, occupy and enjoy the home. Married persons, regardless of whether they both own the home, unmarried individuals and any minor children under the age of 21 shall all be protected by the homestead. The homestead protection shall continue despite the remarriage of a surviving or former spouse.
9) If I am over 62 and my spouse is under 62, should we both file?
Yes. Pursuant to M.G.L. Chapter 188, Section 2(b), an elderly homestead protection for the individual over the age of 62 is personal to the qualifying individual and will terminate upon the transfer of their ownership interest, subsequent declaration of homestead on another property, abandonment or death.
In order to ensure that the homestead protection does not terminate unexpectedly for the spouse that is under the age of 62, one homestead should be filed per owner. This is a noteworthy change under the new law. Under the former statute, filing a new declaration of homestead voided any earlier homestead which could have opened up a claim period for previous creditors, leaving homeowners unprotected for a period of time. Effective March 16, 2011, a second homestead declaration shall relate back to the first declaration, thereby ensuring that the homeowners maintain their homestead protection.
When your spouse turns 62 and qualifies for an elderly homestead protection, you may also consider filing another elderly homestead on their behalf. If and when you and your spouse both qualify as elderly, you may aggregate each personal five hundred thousand dollar ($500,000) protection to one million dollar ($1,000,000).
10) Is there anything I will not be protected from?
The following are exempt from the homestead law:
a sale for federal, state and local taxes, assessments, claims, and liens;
a mortgage on the home;
an execution issued from the Probate Court to enforce its judgment that a spouse pay for the support of a spouse, former spouse or minor children;
where buildings on land not owned by the owner of a homestead estate are attached, levied upon or sold for the ground rent of the lot where 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;
a lien on the home recorded prior to the creation of the homestead.
11) What happens to my Homestead if I should re-mortgage or take out a second mortgage or home equity loan?
An estate of homestead shall be automatically subordinate to a mortgage on the home that is executed by all of the home’s owners. For homeowners that have previously executed a mortgage that included a waiver of the homestead protection, the new law applies to the existing homestead. This “waiver” shall be treated as a subordination and the previously recorded homestead shall be in full force and effect. As a result, there is no immediate need to file a new homestead declaration after you refinance, take out a second mortgage or a home equity loan. Although it is not necessary, it may be advisable in certain circumstances. Under the new law, you can file a new declaration without injury because the subsequent declaration shall relate back to the previous declaration.
Where there are multiple owners, if a mortgage is executed by fewer than all of the owners it shall still be subject to the estate of homestead and shall be considered superior only to the homestead estate of those owners who are parties to the new mortgage, their spouses and minor children, if any. The homestead protections of those owners who were not parties to the new mortgage shall remain intact.
12) If I divide my time equally between my winter and summer residences, can I declare a Homestead on both?
No. A homestead can be declared only on an applicant’s “principal residence”. A person can have more than one residence but the statute only allows the protection on one’s primary dwelling. There is no legislative intent to allow the exemption to apply to a vacation home that is not principal residence. For example, a husband cannot declare a homestead exemption on one residence while his wife declares the exemption on another family residence, unless each can prove that the residence is their principal residence. If a homestead declaration is filed for a vacation home and it is not your principal residence or you do not intend to reside in it as your primary dwelling, no protections shall apply. Also, the subsequent homestead on the vacation home shall terminate a prior homestead on an actual principal residence.
13) What if my home is sold or damaged?
If the home is sold, the sale proceeds shall be protected by the homestead for one (1) year after the date of the sale or on the date when a new home is purchased with the proceeds, which ever is earlier. If the home is damaged by a fire, for example, the insurance proceeds are protected for two (2) years after the date of the fire or on the date when the home is reconstructed or a new home is purchased, which ever is earlier. Pursuant to M.G.L. Chapter 188, Section 11(b), temporary occupation of a trailer, manufactured home or other temporary housing shall not be considered a principal residency during the reconstruction or replacement of the home. Proceeds do not need to be kept in an escrow account in order to be afforded a homestead protection. Any excess proceeds shall lose their homestead protection after reconstruction or when a new home is purchased.
14) How does the Homestead declaration help protect a home against unsecured creditors in bankruptcy proceedings?
Remember that the homestead declaration protects a homeowner only from unsecured creditors. It will not offer protection from first or second mortgage lenders and/or equity lenders who possess a security interest in a home. If payments are not current on these types of secured credit, a homeowner runs the risk of losing the home to foreclosure proceedings.
In a Chapter 7 bankruptcy, or asset liquidation proceeding, a homeowner is allowed to claim certain exemptions which function as asset protection allowances. If a homestead declaration is in place, and the state homestead exemptions are claimed, a homeowner would be allowed to retain a much greater portion of the proceeds from a liquidations sale of the home than s/he would be allowed to keep under federal bankruptcy law exemptions. This factor in turn decreases, or perhaps even eliminates, the possibility that the homeowner would be required to sell his/her home as part of Chapter 7 proceedings.
In all Chapter 13 bankruptcy proceedings, the court will require a homeowner to repay some or all of the unsecured debt over a three- to five-year period. You will be required to repay a percentage of that debt at least equal to that which the unsecured creditors would receive were a homeowner required to proceed under Chapter 7 liquidation regulations. By increasing the amount of the home’s exemption, the homestead declaration decreases the proceeds which would become available for repaying unsecured creditors through the Chapter 7 alternative. This may decrease the percentage of the unsecured debt the homeowner would be required to repay through a Chapter 13 proposal.
15) Can my Homestead be terminated?
Yes, the estate of homestead may be terminated by any of the following methods:
if the home is conveyed by deed to a non-family member and the deed is signed by the owner and if applicable, a non-owner spouse or former spouse residing in the home as a principal residence at the time the deed is drafted;
a recorded release of the homestead is signed and acknowledged by the owner and if applicable, a non-owner spouse or former spouse residing in the home at the time of the release;
abandonment of the home as a principal residence by the owner, owner’s spouse, former spouse or minor children, only as they apply to rights of the persons who abandoned the home. Military service shall not be considered abandonment;
if the deed is held in trust, either the trustee or a beneficial owner identified in the homestead declaration records a termination on the property held in trust.; or
if a subsequent homestead declaration is made on another home, such as a vacation home, it shall terminate a prior homestead on an actual principal residence.
Please note, there are a number of transfers that do not terminate an already declared homestead. Any transfer of the property between spouses, former spouses, co-owners, a trustee and a beneficiary or a life tenant and a remainderman will not terminate a previously declared homestead. Also, if a conveyance or release is made without the signature and acknowledgement of a non-owner spouse or former spouse who is residing in the home at the time the principal residence is conveyed or released by an owner, it shall not affect the homestead of the spouse who failed to sign.