Homestead Declaration
Our office can prepare a Homestead Declaration for you for this transaction if the home you are purchasing will be your primary residence. Under Massachusetts Law an owner of a home who intends to occupy it as their principal residence can protect a portion of the equity in their home by merely filing a Declaration of Homestead in the Registry of Deeds where the property is located.
Homestead FAQ’s:
What is the Homestead Act? The Massachusetts Homestead Act is a law under which a homeowner may establish an Estate of Homestead. A homestead estate provides limited protection of the value of the home, up to $500,000, against unsecured creditor claims. The Homestead Act is Massachusetts General Laws (MGL) Chapter 188.
The homestead estate is designed to protect home ownership from execution and forced sale, so long as the owner or covered family member occupies or intends to occupy the property as his or her principal place of residence.
How is the Homestead established? The declaration is filed at the Registry of Deeds for the county where the property is located. There are two types of Homestead Declaration. The standard form of homestead declaration is filed under Section 1 of the Homestead Act. The second form is for an elderly or disabled person and is filed under Section 1A.
Section 1: Homestead Declaration under Section 1 may be filed by an owner of a home for the benefit of his or her family. Although only one owner files, a declaration filed by one spouse benefits both, and their children.
Section 1A: An elderly (age 62 or older) or disabled person may declare a Homestead under Section 1A. The Section 1A homestead benefit does not extend to other family members, but each qualified owner may file separately.
Under both sections the property must be occupied as a principal residence, and the extent of the homestead protection is $500,000.
What does the Homestead do? Upon filing a Declaration of Homestead, the homestead estate is exempt from attachment, execution or forced sale for payment of “non-exempted” debts.
What are exempted debts? What debts are not protected against by a Homestead Declaration? The following are exempt from Homestead protection: federal, state and local taxes and liens; mortgages contracted for purchase of the home and most other mortgages; debts and encumbrances existing prior to the filing of the declaration of Homestead; probate court executions for spousal or child support; attachments on land not owned by the owner of the homestead; probate court executions for child support and spousal support; and court ordered executions in cases of fraud, mistake, duress, undue influence, and lack of capacity.
What information is required? The form will ask for the name of the owner, the property address and the title reference of the property. The title reference is the Book and page of the owner’s recorded deed, certificate of title number (if the property if registered land), or probate court docket number (for inherited property). The signed form is required to be notarized before filing. For a disabled person’s homestead declaration, a disability letter must be attached.
How does the Homestead Law define “disabled person?” A disabled person is defined as an individual having a permanent physical or mental impairment meeting the disability requirement for supplemental social security. If filing a disabled person’s homestead declaration, you must attach to the Homestead form a certified copy of a disability letter issued by the United States Social Security Administration, or a letter signed by a licensed physician registered with the Massachusetts Board of Registration in Medicine that states the declarant is disabled as defined in 42 USC 1382 (a) (3) (A) and (C).
Is the amount of the Homestead calculated from the base value of the real estate or the equity above the mortgage or prior liens? The law is unclear on this issue. Recent court cases suggest that the Homestead applies to the equity above any exempted liens or encumbrances.
Do I have to file a new Homestead every time I re-mortgage or take out a second mortgage or home equity loan? Generally, no. In some cases, however, the lending institution may require that your Homestead be released prior to or as part of the refinancing. You should check the language of your mortgage documents which may void a previously filed homestead. In that case you would have to re-file.
Can (a) trustee(s) file for Homestead protection? Yes, real estate held in a trust is eligible for Homestead protection so long as the beneficiary of the trust lives in the property as their primary residence. There is a special form of declaration for property held in trust.
Will my Homestead protect my home from being taken if I go into a nursing home? No. Liens imposed by the Massachusetts Department of Transitional Assistance, or MassHealth, as a result of payment of Medicaid benefits, are governmental liens, exempt from Homestead protection.
Can I file a Homestead for my residence if it is a mobile home? Yes. However, for a mobile home, the declaration is not filed at the Registry of Deeds, but at the city or town clerk’s office in the city or town in which the mobile home is located.
This office can prepare a declaration of homestead as part of your closing. The cost for this service is $120.00 which includes the cost to prepare the Declaration and the recording fee. Please let us know if you want us to prepare and record this Declaration.