A. THE MASSACHUSETTS HOMESTEAD ACT UNDER G.L.c.188 IS DESIGNED TO GIVE HOMEOWNERS LIMITED PROTECTION AGAINST UNSECURED CREDITORS.
The Massachusetts Homestead Act is a law in Massachusetts by which a homeowner is protected by what is called an estate of homestead. This estate of the homestead which is created by G.L.c.188 provides limited protection of the value of a debtor/homeowner's home up to the amount of $500,000 against only unsecured creditor claims. The homestead act does not, however, apply to situations where one has provided a home as collateral or security for a loan in the first instance as a condition prerequisite for obtaining a loan or other financing. The estate of homestead is designed to protect homeowners from both executions and a later forced sale so long as the owner or covered family member (who is subject to the claim of an unsecured creditor) occupies or intends to occupy the property as his or her principal place of residence. The purpose of this legal protection is to exempt the homestead estate from attachment, execution or forced sale of "non-exempted debts."
1. Under Massachusetts law, everyone who owns a home and principally resides in that home receives an automatic exemption in the amount of $125,000. By filing and recording of a written declaration of homestead at the local registry in the county in which the property is located increases the exemption amount from $125,000 to $500,000. Keep in mind that two kinds of a declaration of homestead exist. The first declaration is under G.L.c.188, section 3 for non-disabled persons. The second kind of homestead petition applies to elderly or disabled individuals who file under G.L.c.188, section 2. Under Section 3, the form must be filed by the owners of a home for the benefit of their family. If it is trust that owns the home, then the trustees must file and must later file an application for homestead protection as trustees of the property.
Under section 2, the exemption only applies to the disabled or elderly owner and not for the benefit of their family. In each case, the property must be occupied or intended to be occupied as a principal residence of the owner. There are no exceptions to this rule. The homestead protection is $500,000 under section 3 but may be higher for disabled or elderly individuals under section 2. As well, owners of a mobile or manufactured home are entitled to homestead protection under the statute. In these cases, the petition for homestead protection must be filed in the registry in the county in which the mobile or manufactured home is located.
2. There are certain debts to which the homestead petition does not protect called "unexempted debts" are as follows: Federal, state and local taxes and liens; mortgages contracted for the purchase of the home and most other mortgages; debts and encumbrances that existed prior to the formation of the homestead petition; probate court orders for child or spousal support; attachments on land not owned by the owner of the homestead estate and finally court-ordered executions in cases of fraud, mistake, duress, undue influence or lack of capacity. These exceptions are all spelled out in detail under G.L.c.188.
3. In order to file a homestead petition, a homeowner can procure a petition from the local registry of deeds. In fact, each registry of deeds will permit a homeowner to order the same online. When preparing the form for filing at the registry the homeowner must name each of the owners and nontitle holding spouses, property address and title reference to the property. The title reference is, of course, the book and page number of the property for which the owner seeks a homestead. If the homeowner's property is registered land, then you will need a certificate of title reference in order to complete the homestead application. All owners must sign the document and have their signatures notarized. The marital status of all owners must be stated.
Again, the protection applies to principal residences only. That means if an owner has two homes one primary and one vacation home in the same state he cannot have the homestead protection for both. Nor can a husband procure a homestead for the principal residence and his wife gets a homestead for the vacation home unless they can provide evidence that each residence is their "principal" residence. The cost of filing the declaration of homestead is, of course, uniform across all counties in Massachusetts and is $35 as well as accompanying any notary charges. In the case of a notary, banks will generally notarize this document for no charge for their customers.
4. For a disabled person, a disability letter must be attached to the application. The definition of a disabled person is one who has a physical or mental impairment of the same kind as required for supplemental social security. Either a certified copy of a disability letter issued by the Social Security Administration or letter signed by a licensed physician registered with the Massachusetts Board of Registration in Medicine that affies that the declarant is disabled as defined under federal law 42 U.S.C.1382 et.seq.
For those individual homeowners living in Massachusetts, a homestead petition is an effective and economical way to preserve the equity a homeowner has in his or her home in the event of encumbrances, liens, and lawsuits filed by unsecured creditors. By not having such a protection in place, a homeowner is leaving both himself and his family at great risk in the event of a claim. As a homeowner who has worked hard to purchase his or her home, you must make sure that if you do not have a homestead petition that you obtain one immediately. The Katz Law Group has assisted many homeowners in preparing homestead petitions. Please call us today at 508-480-8202 to help you navigate the homestead process.