The Homestead Act in Massachusetts
By Attorney Christine Webster
What is the Homestead Act? And how do I get one? Are frequent questions that I hear from buyers of residence real estate.
The word "homestead" itself conjures up images of Colonial times when with nothing more than some white paint or cloth, settlers marked out their land and claimed it as their "homestead", and in fact, the Homestead Act's origins do harkens back to Colonial Times. But the real importance of the Homestead Act is not its origins, but its purpose and importance.
The Massachusetts Homestead Act is an important law designed to protect the use and possession of the family home. In many states, if a homeowner is sued for any reason, including an auto accident or credit card debt, the creditor may be able to force the sale of the home in order to pay the debt. However, in Massachusetts, the general rule is that if a homestead has been declared by the homeowner, creditors can not force the sale of the home in order to satisfy a claim or judgment. There are some limited exceptions to the general rule, including mortgages; court ordered child support and /or alimony, federal, state and local taxes, court judgment based on fraud, duress, mistake, undue influence or debts that were contracted before the Homestead Act was declared. Further, a homestead will not protect against liens imposed by the Massachusetts Department of Revenue payment of Medicaid benefits. Notwithstanding, currently as long as the recipient, or the spouse of the recipient of Medicaid benefits is living, the Commonwealth will not look to force the sale of the home reimburse for benefits paid, but will wait to get paid.
The Homestead Act does not prevent someone from placing a lien on your property to be paid upon the sale of the property; rather, it only prevents the forced sale of your home. Eventually, the lien holder will get paid upon the sale of the home.
Anyone who owns a residence as their principal residence can declare a homestead. The Homestead protects the declarant and his or her spouse and minor children, so only one homestead is appropriate per family. As of 2004, the Homestead Act protects up to $500,000.00 of equity in the home. Equity is defined, in its simplest terms, as the difference between what your home is worth and what is owed on it. Therefore, if the equity exceeds $500,000.00, a creditor may be able to force the sale of the home, but the first $500,000.00 would be paid to the homeowner. For persons over 62 or disabled, $500,000.00 of homestead protection is available for each owner who is over 62 or disabled.
Most importantly, however, is to know that in order to receive homestead protection, you must record a Declaration of Homestead at the County Registry of Deeds where your property is located. Homestead protection is not automatic. Moreover, recent case law suggests that if someone refinances, they should record a new Homestead or make sure that the new mortgage contains specific language preserving their homestead.
Most Registries have Homestead forms available. Currently, the recording fee for a homestead is $35.00.
Attorney Christine Webster specializes in real estate law. Her office is located at 117 Park Avenue, Suite 203, West Springfield, MA 01089. You can reach her by phone at (413) 732-0074 or email cwebster@christinewebster.com.