Massachusetts Homestead Act – A Legal No-Brainer!!!

For many, your home is the most valuable property you will ever own. Not only is it money in the bank, but it’s an investment that you enjoy every day (except when the water heater bursts or the roof leaks!!)

What would happen if that home was sold by one of your creditors to satisfy your debt that you neglected to pay?

What would happen if one day you came home, and instead of a package from Amazon, the Sheriff was standing on your porch handing you a Summons to appear in Court?

What would happen if one day you came home and discovered that annoying collection agent for your Credit Card Company was using your jacuzzi? – OK, maybe that’s a stretch…

The point is, without Homestead protection the most valuable and cherished thing in this world that you own may be lost forever.

The Massachusetts Homestead Law, if properly recorded at the Registry of Deeds in the County in which your home is located, may protect your home against the claims of many of your creditors, if:

  1. You live in the house or plan to live in the house, and

  2. You use it or plan to use it as your “primary” residence – where you live most of the time.

What Am I  Protected From?  

From certain creditors selling your home to satisfy a debt you owe to them.

There are a few exceptions of course – Mortgages on the property, Federal and State Tax Liens, Condo fees, Child Support Judgments are a few exceptions – your home could be sold if you default on those payments and the Homestead Act will not protect you.  So make sure you pay those debts; truth be told, if you don’t pay any debt there will be legal consequences – like bad credit, denial of credit, judgment liens, annoying court proceedings, bankruptcy, etc.

But for most unsecured credit card debts, a properly and timely recorded Homestead Declaration will protect your home from being sold to satisfy that debt.

How Much Does the Homestead Act Protect?

A properly recorded Homestead Declaration protects the equity or cash value in your home, up to certain limits.

The “equity” in your home is calculated by subtracting all mortgages, home equity loans and recorded liens from the fair market value of the home. The difference is the “equity” you have in your home. (e.g. Home value ($300,000) minus outstanding Mortgages ($100,000) = “equity” ($200,000.00).

In Massachusetts, there is an automatic $125,000 homestead protection on your home, you do not have to file anything.

But if you have more than $125,000 in “equity” value in your home, you must record a declaration of homestead to get the full $500,000 protection.

But wait, there’s more.  Each homeowner who is 62 or older, or disabled, can claim the $500,000 protection for him or herself. So, if you and someone else own your home together and either of you are elderly or disabled, you can protect your property up to $1,000,000 in equity.  No Brainer!

Who Does the Homestead Act Protect?

A properly recorded Homestead Declaration will protect your home from being sold if the following people live there:

✓ You,

✓ other owners of your home,

✓ family members who live in your home, and

✓ any members of your family who move into your home in the future.

✓ Even if the home is owned by a trust, the trustee can file a homestead declaration on behalf of the trust’s beneficiaries.

What Does the Homestead Not Do?

The Homestead will not protect your property from all debts, there are exceptions as mentioned above (mortgages, child support, taxes, condo fees).  Remember, if you fail to make your mortgage payments, the bank can and will foreclose and sell your home at public auction to get back the money they loaned you.

And, if you sell your home to someone who is not in your family, or you abandon your home, you lose the Homestead protection.

Also, if a lien was recorded on the house before you filed your Homestead Declaration, the homestead will not protect your house against that lien.

How Do I Record Homestead Protection for my Home?

If you’re a “do-it-yourselfer”, go to the Massachusetts Registry of Deeds in the County in which your home is located, get the Homestead Act form, fill it out, sign it before a Notary, and record it – recording fee is $35.00.

I strongly recommend that you contact us to prepare the Homestead Declaration to ensure it’s done properly and timely.

No Brainer.

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