A new Massachusetts homestead law, which was supported by Governor Patrick, allows for automatic homestead protection of all homes in Massachusetts. All homes in Massachusetts will have an automatic homestead exemption of up to $125,000. Unfortunately, while the law protects all Massachusetts homeowners, we urge our Massachusetts bankruptcy clients to file a written homestead as well. Why? Because the written homestead, properly filed with the Registry of Deeds, provides $500,000 in protection. The cost of filing a homestead is $35, and the cost of retaining an attorney to assist you should be nominal as well.
The written homestead protects your home from creditors, if and when you file bankruptcy, if it has more than $125,000 in equity. Furthermore, it protects you if you are a defendant in a civil action, including motor vehicle accidents and are uninsured or underinsured.
The law would add additional protection to Massachusetts consumers. The homestead exemption would apply to homes held in trust. It will also apply to multifamily homes in Massachusetts. Further, it would extend to a spouse who you marry after purchasing the property; and, it would protect your spouse heirs if you die while owning the property in your own name. Moreover, it protects the proceeds from the sale of your home for up to one year. These considerable additions to the law will enable Massachusetts consumers to sell or inherit a home and not have to scramble to work around the homestead law. Finally, when purchasing a home, the lender’s attorney must inform consumers of the difference between the automatic and the written homestead.