As we reported late last year, there is a new Massachusetts Homestead law which goes into effect this week. The new law has the same citation as the old Homestead statute, Massachusetts General Laws, Chapter 188, and has a few key provisions that protect Massachusetts homeowners. The good news from a Massachusetts bankruptcy lawyer is that everyone will be protected with up to $125,000 of equity. Anyone who does not file a homestead with the Registry of Deeds will be protected up to that amount. Thus, it will apply to pre-existing debts, but not to pre-existing liens on the property.
The law also provides up to $500,000 in equity protection for those that file a Homestead Act declaration with the Registry of Deeds. This can be doubled for a married couple that files a declaration, and qualifies as elderly or disabled. When there are multiple owners, they can each declare a homestead of up to $500,000, so long as they qualify as elderly or disabled.
Another considerable change in the law is regarding people who put their homes into a trust. To effectuate a homestead with real estate in a trust, there are numerous requirements including that the trustee file the homestead, that the names of the homestead protection beneficiaries be listed, and that the property is their principal residence.
Other consumer friendly aspects to the new law are that transfers within the family will not destroy the homestead protections, including a transfer at death to a spouse. Adult children need to file their own homestead if they are co-owners of their parents real estate. Furthermore, the proceeds from the sale of a principal residence (for one year), or the insurance proceeds from the destruction of a principal residence (for two years), are protected in order to purchase a new residence.
Finally, the question we often get as to which spouse signs a homestead is answered: both!