The Massachusetts Homestead Law: $500,000 In Asset Protection

Buying a home, for most, is the single biggest investment homeowners will make in their lifetime. But what happens if you are involved in a car accident or run into serious financial trouble, and creditors are knocking on your door, threatening to place a lien on your home? A Massachusetts Homestead Act declaration can protect your single biggest asset in these situations. A Massachusetts Homestead Declaration enables all Massachusetts homeowners to protect up to $500,000 in equity from certain claims of creditors. It is one of the most overlooked and cost-effective asset protection devices in Massachusetts.

As we have always done, and now by law, we offer borrowers the option to record a Declaration of Homestead on their property. We charge a nominal fee for this service ($40 prep fee + $35 registry recording fee).

For less than $100, a Massachusetts homestead provides a simple and inexpensive asset protection device which shields a principal home from up to $500,000 in certain creditor’s claims. Now the Legislature has passed the long awaited revisions to the Massachusetts Homestead Act (Senate Bill 2406), giving homeowners expanded protection.

Here’s a summary of highlights of the new Homestead law:

  • 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 do anything.
  • 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 is a change from prior practice.
  • If you already have a homestead recorded at the registry of deeds, you do not have to re-file it. You are all set, and have the full $500,000 protection.
  • Homesteads are now available on 2-4 family homes, and for homes in trust.
  • The existing “elderly and disabled” homestead will remain available at $500,000.
  • If you have a homestead as a single person, and get married, the homestead automatically protects your new spouse! Homesteads now pass on to the surviving spouse and children who live in the home.
  • You do not have to re-file a homestead after a refinance. There’s always been confusion here, with lenders requiring homeowners to either subordinate or release homesteads. Under the new law, homesteads are automatically subordinate to mortgages, and lenders are specifically prohibited from having borrowers waive or release a homestead.
  • Closing attorneys in mortgage transactions must now provide borrowers with a notice of availability of a homestead.