Ashleigh C. Gelinas, Esq.

Governor Deval Patrick recently signed into law a sweeping overhaul of the Massachusetts homestead law, to take effect March 16, 2011. Chapter 395 of the Act of 2010 (“the Act”) rewrites the previous homestead law by most notably creating an automatic homestead protection of $125,000 on a principal residence.

The prior law required homeowners to file a written declaration of homestead in the Registry of Deeds to protect their homes from the claims of creditors. Such a written declaration of homestead is still advised because the declared homestead exemption continues to protect up to $500,000, while the automatic exemption is limited to $125,000.

The following are some of the other important changes in the homestead law of which homeowners should be aware:

• Anyone who declared a homestead prior to March 16, 2011 will continue to be protected and the existing homestead will be governed by the new law.
•  Both the automatic homestead and the declared homestead apply to a residence owned by a trust. In this case, the declaration must be signed by the trustee and the trust beneficiaries must be identified.
•  A homeowner and his or her spouse are both required to sign a declaration of homestead.
•  If a single homeowner subsequently marries, his or her spouse becomes entitled to the benefits of the automatic or declared homestead.
•  All homesteads are automatically subordinate to a mortgage on the property. Lenders may not request a release of homestead in connection with the making of a mortgage.
•  Special homesteads are still available for individuals who are age 62 or older, or disabled under Section 2 of the Act. This homestead benefit does not extend to other family members, but each qualified owner may file. The extent of homestead protection is $500,000 for each elderly or disabled individual filing a declared homestead under this provision.
•  An automatic or declared homestead is terminated by the following actions:

1.  
   1.  a deed to a “non-family” member (or where a home is held in trust, a deed by the trustee);
   2. a recorded release of the estate of homestead;
   3. the abandonment of the home as the principal residence by the owner, the owner’s spouse, former spouse or minor children, or beneficial owner, except that such abandonment shall terminate only the rights of the persons who have abandoned the home; and
   4. the subsequent recorded declaration of an estate of homestead on other property.

•  Only a deed to a “non-family member” terminates a homestead declaration and “no deed between spouse or former spouses, or co-owners who individually or jointly hold and estate of homestead…and no deed between a trustee and a trust beneficiary or between a life tenant and a remainderman shall terminate the homestead unless each co-owner, spouse, former spouse or trust beneficiary entitled to the benefit of the homestead has executed an express release thereof.”
•  The closing attorney or settlement agent in all mortgage transactions is required to provide the mortgagor with notice of the right to declare homestead protection under the Act (including a list of differences between automatic and declared homesteads), receipt of which must be acknowledged in writing by the mortgagor.

 The foregoing general summary is for informational purposes only. Please contact your legal advisor to review your particular circumstances.