Homestead Law Protects Your Home Against CreditorsBy | On Feb 15, 2011
On March 16, 2011 changes to the Homestead Act (M.G.L. C188 §1) will take effect, offering sweeping new changes to benefit homeowners, protecting them against creditors, (other than their mortgage lender).
Some of the new changes for the protection of your home can be summarized as follows:
1. New Automatic Protection. All Massachusetts homeowners will receive an automatic homestead exemption of $125,000 for protection against certain creditor claims on their principal residence without having to file any additional paperwork. By simply buying a home as your principal residence, the $125,000 protection applies.
Exceptions to the law are as follows:
a. sale for taxes;
b. for a debt contracted prior to the acquisition of said estate of homestead;
c. for a debt contracted for the purchase of said home;
d. upon an execution issued from the probate court to enforce its judgment that a spouse pay a certain amount weekly or otherwise for the support of a spouse or minor children;
e. 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 whereon they stand;
2. Declaring a Homestead provides $500,000 protection. All Mass. residents are eligible for a $500,000 “declared homestead exemption” by filing a declaration of homestead at the registry of deeds. For married couples, both spouses will now have to sign the form which will be a change from current practice.
3. 2-4 Family Homes Eligible. Homesteads are now available on 2-4 family owner occupied homes.
4. Trust Beneficiaries Protected. The beneficiary of a Trust will now be able to hold a Homestead in a home, although giving up the anonymity of holding a home in Trust. The Homestead must be declared by the Trustee of the Trust.
5. Elderly and Disabled Protected. The existing “elderly and disabled” homestead will remain available at $500,000.
6. New Spouse protected. If you have a homestead as a single person, and get married, the homestead automatically protects your new spouse.
7. Surviving Spouse Protected. Homesteads now pass on to the surviving spouse and children who live in the home.
8. Intra-Family Transfers Protected. Transfers between family members will not terminate a previously declared homestead.
9. Lenders Prohibited from Waiver of Homestead. Under the new law, homesteads are automatically subordinate to mortgages, and lenders are specifically prohibited from having borrowers waive or release a homestead.
Protecting your home in the event of financial problems other than non-payment of your mortgage loan, is a very important family protection.
For example, should you be subjected to a judgment against you, the creditor cannot attach a lien to your home and sell it to recover the judgment if the lien is for less than $500,000 for a “declared” homestead, and up to $125,000 for an “automatic” homestead (see above).
For answers to any question you may have about this important homestead protection, or to secure the necessary forms for a “declared” homestead exemption, please contact us at 413-499-3520.