The New Homestead Statute The Law Office of Michael Riley March 2011

What is a Declaration of Homestead? An estate of Homestead is a type of protection for a person’s residence, in the form of a document called a “Declaration of Estate of Homestead” The form is filed at the Registry of Deeds in the county where the property is located, referencing the title/deed to the property It allows homeowners in Massachusetts to protect their property up to $500,000 of the value of their primary residence, per family

Who can file a Homestead? Family members can declare homestead protection on the family home An owner can claim homestead with or without children, and whether or not married The home can be a one, two, three or four family building, an apartment house or a condominium unit so long as it is residential Homestead cannot be claimed on a secondary residence, such as a cottage or summer home There cannot be more than one homestead estate for an individual. Homestead can be filed by a sole owner, or, if there is more than one owner, by any of the owners. Only one should file to protect a family, except, if there are two owners and both are either disabled or over 62, it is advantageous for both to file. Homestead won’t stop enforcement of court orders for family support, unpaid taxes, or if debts involve duress, fraud, etc. Homestead declarations will not stop foreclosure for money used to buy the property (usually a mortgage).

What doesn’t a homestead protect? Federal, state or local taxes, assessments, claims and liens Mortgages used to purchase the residence, and in case of the elderly homestead, first and second mortgages held by financial institutions or others An execution issued from the Probate court to enforce its judgment that a spouse pay for the support of a spouse or minor children Where buildings on land not owned by the declarant of a Homestead estate are attached, levied upon or sold for the ground rent of the lot whereon 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 capacity Debts contracted prior to the acquisition of the homestead

Homestead Law St. 2010, c 395 completely rewrites c –Much of previous law carried forward unchanged –Existing homesteads remain valid –New Law takes effect March 16, 2011 First major revision of homestead law since 1977

Homestead Highlights Automatic $125,000 exemption without filing $500,000 exemption with filed declaration of homestead Trust property can be homesteaded Explicit rules re stacking and multiple owners Only recorded liens have state-law priority

New Filing Requirements All owners who desire homestead protection must sign –Major departure from prior law, under which only one could sign. –Such owners must, of course, occupy or intend to occupy the home as a principal residence per § 3(a) Reservation of homestead in a deed is no longer permitted, per § 5(c)

Contents of Declaration Each owner to be benefited and the owner’s non-titled spouse must be identified Declaration must state that “each person named therein” occupies or intends to occupy the home as their principal residence “Signed and acknowledged under penalty of perjury” by each owner or by the trustee While the automatic protection is intended to protect individuals who are not aware of the benefits of filing a Declaration of Homestead, it is still beneficial to file for the additional protection from creditors. This relatively inexpensive procedure can help to protect your most important asset, your family home, to the fullest extent.

Additional Elderly/Disabled Homestead Requirements Declaration under § 2 must state that owners to be benefited are elderly or disabled For a disabled person, must also record one of: –Original or certified copy of SSA disability award letter, or –Doctors letter certifying that the declarant meets the SSA disability requirements An owner 62 or over, or permanently disabled, can file a claim for $500,000 If there are two owners, both either permanently disabled or at least 62, each may file a five hundred thousand dollar homestead for a total of $1,000,000. If a declaration has been recorded and the owner becomes disabled or sixty-two, a new form should be filed to increase the protection. These requirements are the same as under prior law

Questions?