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In response to growing concerns about housing affordability in the Commonwealth, Massachusetts Governor Maura Healey signed the Affordable Homes Act aimed at making homeownership more accessible while also ensuring that homeowners have adequate protection to prevent losing their homes. Included within the Affordable Homes Act was an expansion to the Massachusetts Homestead Act (the “Act”), found within Massachusetts General Laws Chapter 188.
Under the Act, so long as the homeowner occupies or intends to occupy the property as their principal residence, the value of the home (up to a statutory limit) is protected against unsecured creditor claims. A homeowner includes a sole owner, joint tenant, tenant by the entirety, tenant in common, life estate holder, or holder of a beneficial interest in a trust. A principal residence is considered to be the homeowner’s primary residence where they and their family, if applicable, reside. The Act only allows protection for the principal residence, even if the homeowner divides their time between more than one residence or owns a vacation home.
The Act automatically provides $125,000.00 of equity protection. And, since August 2024, taking the extra step of filing a written Declaration of Homestead at the Registry of Deeds in the county where the property is located increases that protection amount to $1,000,000.00. Before Governor Healey signed the Affordable Homes Act, filing a written Declaration of Homestead protected homeowners up to only $500,000.00.
For those aged 62 or older, or with a disability regardless of age, the $1,000,000.00 protection amount remains but includes even more protection. The extra protection lies in the fact that if two owners qualify for the elderly or disabled homestead protection, the total protection on the home increases to $2,000,000.00. Of note, if one homeowner is over the age of 62 and the other is under the age of 62, the elderly homestead protection is limited to that qualifying individual. The same would apply if one homeowner is disabled and the other is not. Protection would end upon the transfer of their ownership interest, declaring a homestead on another property, or death. To avoid an unexpected loss of homestead protection for any spouse or homeowner under age 62, each homeowner should file a Declaration of Homestead. Section 1 of the Act defines a disabled person as an individual who has any medically determinable, permanent physical or mental impairment that meets the disability requirements for Supplemental Security Income.
The Act also provides additional protections to spouses who are not listed as owners in their principal residences. The protection extends automatically to a new spouse where an unmarried person declared a homestead and later marries. Moreover, divorcing spouses are protected against the loss of homestead through termination or divorce. With this, neither divorce nor remarriage will affect the homestead of the spouse who resides primarily in the home.
The Declaration of Homestead protects the equity, or cash value, in a home. For example, if a home has a fair market value of $600,000.00 but also has a mortgage of $400,000.00, then, provided the homeowner has signed and filed a written Declaration of Homestead, the remaining $200,000.00 is equity protected from creditors that may try to take the home or collect money owed to them. If the principal residence is sold, the Declaration of Homestead continues to protect the equity in the proceeds for up to one year after the sale. However, a Declaration of Homestead does not protect against secured debts, meaning that if a homeowner does not pay their mortgage, homestead protection cannot stop the bank from foreclosing on the property. A Declaration of Homestead also does not protect against priority debts, like government taxes or child support. A lien can be placed on the property regardless of when a Declaration of Homestead is filed, but the lien cannot be collected after filing the Declaration of Homestead.
The good news is that for those who have already filed a Declaration of Homestead, the updated protections detailed in the Act will apply retroactively. This means that no new filing is required to receive the increased homestead protection.
Fletcher Tilton PC can assist in making sure your primary residence is protected by a Declaration of Homestead and ensure you are taking advantage of all these great benefits. Whether you are a new client or an existing one, we will quickly respond with the knowledge and strategies necessary to achieve your legal goals.