One step that you can take to protect the equity in your primary residence is to file a Declaration of Homestead. A Homestead Declaration protects your home against certain creditors who might use attachment, seizure, execution on judgment, levy, or sale to collect various debts. The protection is not universal, however. Homestead will not shelter you from “exempted debts” such as mortgages, tax liens, “nursing home” liens, spousal and child support obligations, and certain other court-ordered liens.

There are two levels of protection under the Massachusetts Homestead Act. One, in the amount of $125,000, is automatic. The other, a “declared” homestead, in the amount of $500,000, requires a bit of effort.

Only One Primary Residence Allowed

For you to qualify for either level of protection, the statute requires that you presently live in a home, or that you intend to live in it, as your principal residence. Beware: For homestead purposes, you can have only one primary residence. A “second home” or “vacation home” cannot be protected. Claiming two homesteads would be self-defeating, because the filing of a second Declaration of Homestead invalidates the first Declaration.

Filing a Declaration is not difficult. You can download forms from the Secretary of the Commonwealth’s website. You’ll need details regarding your deed, Certificate of Title, or inheritance of the property to complete the form. Or you may ask your family attorney to assist. The filing fee is only $35 at most Registries of Deeds.

If a married couple owns the home in their names only, or as co-tenants with others, both spouses must sign and record the Declaration. If one of the spouses is not a titled owner, then only the titled owner should sign the Declaration, but you must identify the non-titled spouse who also occupies or intends to occupy the house. Since a Declaration has to be recorded at a Registry of Deeds, all signatures must be notarized. A Declaration of Homestead cannot be created within a deed.

Special Protection for Homeowners Who Are Disabled or Elderly

The Homestead Act gives special protection to homeowners who are disabled or elderly. Each person in those categories is entitled to a $500,000 exemption, and each such couple is entitled to a combined exemption of $1,000,000. For Homestead purposes, “elderly” begins at age 62. “Disability” must be proven by a letter issued by a Massachusetts physician, or by a disability award letter issued by the Social Security Administration, attached to the Declaration form.

Several other features of the Homestead Act merit attention:

  • Homes that are owned by a trust may be eligible.
  • Mobile homes and manufactured homes are eligible.
  • A residential condominium unit is eligible.
  • A two- to four-family dwelling is eligible.
  • After the death or divorce of someone who holds a homestead, homestead protection continues for the benefit of the holder’s minor children and for the benefit of the holder’s surviving spouse or former spouse. That protection continues even if the surviving or former spouse remarries.
  • Homestead protection does not take the place of homeowner’s insurance.
  • The current version of the Homestead Act became law in 2011, but Declarations of Homestead properly made under the prior law remain valid.
  • The proceeds of a voluntary or involuntary sale of a principal residence will be protected for (a) up to one year after the sale date or (b) the date when a new principal residence is purchased, whichever occurs first. Similarly, the insurance proceeds for a home damaged by fire or other calamity will be protected for up to two years after such event, or the date when the home is reconstructed or repaired, whichever occurs first.

Our bank clients should note that if all of the owners of a primary residence sign a mortgage that includes their residence, the Declaration of Homestead is automatically subordinated to the mortgage. Subordination and/or waiver language in the mortgage is neither necessary nor permissible. In addition, under Section 14 of the revised law, in all mortgage transactions, the closing attorney or settlement agent must provide the mortgagor(s) with a notice of their right to declare a homestead. This notice, receipt of which must be acknowledged in writing by the mortgagor(s), shall summarize the differences between an automatic homestead and a declared homestead.