What is the Massachusetts Homestead Act?
The Homestead Act is a law that protects Massachusetts homeowners who occupy a property as their principal residence from having their home sold to pay off unsecured debt. A completely revamped Homestead law went into effect March 16th, 2011. The full text of the new law is at M.G.L. Chapter 188, with the key issues being summarized below.
- Automatically protects up to $125,000 of the equity in your primary residence, no recordation is needed to receive this protection
- Protects up to $500,000 of the equity if a Declaration of Homestead form is recorded at the appropriate Mass. county Registry of Deeds
- single family, 2-4 unit multi-family homes, condos, manufactured homes, mobile homes & cooperatives protected
- You must occupy or intend to occupy the home as principal residence. You can have only 1 primary residence – 2nd homes & investment properties are not eligible
- Homesteads can now be declared by multiple owners
- Existing homesteads recorded prior to March 16, 2011 are still good
- If the home owner dies, the homestead protection continues for the spouse and minor children
- Property held in a trust can now be homesteaded, however, beneficiaries should be identified
- Owners who are elderly (62 or over) or disabled should record a homestead under section 2 of the new law to gain maximum protection of up to $1,000,000; A certified copy of a disability letter issued by the United States Social Security Administration, or a letter signed by a licensed physician registered with the Massachusetts Board of Registration in Medicine that states the homeowner is disabled, needs to be recorded with the Homestead
- Sale proceeds derived from the sale of a property which was subject to a Homestead are now protected until another home is acquired as a principal residence, or one year from the sale date, whichever occurs first.
A Massachusetts Declaration of Homestead will NOT protect the equity from:
- mortgages on the home
- liens on the home that existed prior to filing of the Homestead
- federal, state & local taxes and liens
- court orders for child or spousal support
- Medicaid Liens/Nursing Home Liens - A lien imposed by the Office of Medicaid as a result of payment for Medicaid benefits, is a governmental lien and is exempt from Homestead protection
- court ordered executions in cases of fraud, mistake, duress, undue influence, and lack of capacity
Mass. Mortgage Buddy Tip: You do NOT have to file a new Homestead every time you refinance or take out a second mortgage or home equity loan? The new language which went into effect March 16, 2011 states that homesteads are subordinate to mortgages and that no language in a mortgage can affect a homestead except to subordinate it. Lenders are prohibited from requiring a release of Homestead.
THE COST TO RECORD A DECLARATION OF HOMESTEAD IS $35
Massachusetts HomesteadQ&A from Secretary of State’s Office