The Massachusetts homestead law protects a homeowner’s primary residence from forced sale by an unsecured creditor. What this means is that if you are sued and a creditor obtains a judgment against you, you cannot be forced to sell your home to pay the creditor unless the equity in your home is greater than the amount of your homestead protection. If the equity in your home is greater than the homestead protection, the home may be sold but the creditor will receive only what is left after you first receive proceeds equal to the amount of the homestead protection. The protection extends to the homeowner’s family which is defined as spouse and minor (under age 21) children.
How much is the homestead protection? Under the “new” homestead law enacted in 2011, a homeowner is entitled to automatic homestead protection of $125,000. However, homeowners who file a Declaration of Homestead with the Registry of Deeds can increase that protection to $500,000. For married couples where both spouses are over the age of 62, the homestead protection can be doubled to $1 million by filing an ‘Elderly’ Declaration of Homestead. Increased homestead protection is also available to disabled individuals. Homestead protection is available whether you own your property in your individual name(s) or in trust.
In November of 2022, the Massachusetts legislature updated the homestead law to clarify a few of its provisions, notably:
- The 2011 homestead law allowed the holder of a life estate interest in real estate to have homestead protection, but not the holder(s) of the remainder interest in the property. The 2022 updates to the homestead law have made it clear that both the life estate holder and the remaindermen are entitled to homestead protection, provided the property is their primary residence.
- For all you co-op owners out there, the 2022 updates also made it clear that a lessee-shareholder of a residential cooperative housing unit is entitled to homestead protection.
If you are the owner of a home in which another person has a life estate, you are now entitled to Homestead protection. Both the life estate holder and the remaindermen should file a declaration of homestead at the Registry of Deeds to ensure the entire property is protected from creditors’ claims. Similarly, co-op owners should now file for homestead protection.
Keep in mind that a Declaration of Homestead will not protect you from all types of liability that may impact your home. It will not protect the home from a Medicaid/MassHealth lien for benefits paid on behalf of the homeowner, including benefits paid for nursing home care. A Homestead will not protect against governmental liens such as tax liens. A Declaration of Homestead will not prevent your mortgage lender from foreclosing if you do not pay your mortgage.
Interestingly, the homestead law protects the proceeds from the sale of a home for up to one year following the sale, and insurance proceeds received as a result of a fire or other casualty from the reach of creditors for a period of two years.
Keep in mind that if you filed a Declaration of Homestead and then refinanced your mortgage after your Homestead was filed and before March 16, 2011, your mortgage transaction may have voided your homestead protection. However, beginning March 16, 2011, a mortgage transaction does not impact your homestead protection even when the homeowner signs a mortgage that includes a waiver of homestead provision. The waiver of homestead provision in the mortgage relates only to the mortgage itself (which the homestead does not protect against anyway).
If you have questions about homestead protection, please feel free to give us a call, or get the advice of an experienced real estate or estate planning attorney. And if you have not filed a Declaration of Homestead on your home, make sure you do so!
Maria C. Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA), and a past President of the Board of Directors of the Massachusetts Forum of Estate Planning Attorneys. For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.
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