Buying a home doesn’t just involve finding a home that you love. There are certain steps you can and should take to protect yourself – not just during the transaction itself, but also continuing thereafter. One of those important protections is called a “Homestead”. Here is a brief overview of homesteads from Attorney Joe Anderson of Crowley & Cummings:
“It is indeed a rarity that someone owns and resides in a home as their principal residence in Massachusetts and has not filed a homestead. Nonetheless, you do not want to be the unfortunate person left in the cold when it comes to maybe the only fraction of a real estate closing that actually protects the homeowner (as opposed to the 70 other pages of documents and disclosures that only really protect the mortgage lender). There is a shortage of things in life that are too good to be true, but the Massachusetts homestead is akin to having a professional mechanic replace your brakes for free, if not much better. In the real estate world and estate planning arena, the greatest financial benefit for your dollar spent might be the homestead. And when I say dollar, it only costs $35.00 to record a homestead.
A homestead estate exempts a certain amount of equity in a home which is used as a principal residence from attachment, seizure, execution on judgment, levy and sale for the unsecured debts of the owner of the home. Exceptions to this protection would include federal, state and local taxes, assessments, claims and liens, liens recorded prior to the creation of the homestead estate, mortgages, orders of the probate court for support, a levy or sale for ground rents (where the homeowner does not own the land) and an execution from a court to enforce a judgment based upon fraud, mistake, duress, undue influence or lack of capacity.
By law, merely by owning a home and using it as a principal residence entitles the owner to automatic homestead protection of up to $125,000.00 of the equity therein. However, by actually filing a Declaration of Homestead at the applicable registry of deeds increases the equity protection to up to $500,000.00.
Under the Massachusetts Homestead Act, the homeowner’s equity is protected for up to one year after a sale of the home, and, if the home has suffered a casualty that results in the payment of insurance proceeds, then the insurance proceeds are protected for up to two years, in order to allow the homeowner time to acquire a homestead in a new (or reconstructed) home. The Declared Homestead protects the owner, owner’s spouse and minor children. Even upon the death of the owner, the protection continues for the spouse and minor children.
Please don’t hesitate to contact me directly regarding your interest in the Massachusetts Declaration of Homestead. There are some technical requirements, so your best bet would be to arrange to have a Massachusetts attorney draft the appropriate filing. We can either a) confirm there is an existing homestead filed at the registry of deeds and email you a copy; or b) prepare a homestead for you, free of charge (provided you pay the $35.00 recording fee charged by the registry of deeds).”
Thank you, Attorney Joe Anderson!