Note: this article does not represent legal advice. As in all areas of law, to fully understand your rights you should consult an attorney.
Under Massachusetts law, homeowners may apply for “Homestead Protection” which may provide up to $500,000 (up from $100,000 in previous years) in home equity protection from creditors while the homeowner resides in the home or while a spouse and/or minor children continue to reside there. In the event a creditor (such as a credit card company or a plaintiff in a lawsuit) wins a judgment against the homeowner and places a lien on the property for collection, the creditor cannot execute the lien against the property while the homestead protection is in place. This means that the creditor cannot force the sale of the property and remove the family from their home.
The homestead exemption does not protect against every type of debt. Certain judgments (such as spousal/child support; federal, state or real estate taxes; or mortgages) will take priority over the homestead protection.
Although many states create a homestead exemption automatically, Massachusetts requires that a “homestead declaration” be filed at the Registry of Deeds for the county where the property was located. This may be done in your deed or in a separate document. Filing a homestead declaration is not difficult or costly; however, most homeowners who are entitled to homestead protection are not aware they are entitled or are not aware of the filing requirement. Failing to complete the simple filing leaves your home susceptible to reach by creditors.
If not contained in your deed, the homestead declaration is a one page document identifying your property and states that you are claiming the protection for your home. The document is recorded at the Registry of Deeds upon receipt of a $35 filing fee.
It is important to note that the refinancing boom of the past 10 years may have disrupted previously filed homestead declarations. Often, a lender’s documents may include a waiver of the homestead protection in order to perfect its mortgage on the property. If, when you signed those mountains of papers when you refinanced, did waive your homestead exemption to all creditors, perhaps another homestead declaration should be filed.
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* These forms are for Plymouth County residents only. Residents of other Mass. counties should use their county's form.
Reminder: I am an accountant -- this article does not represent legal advice. As in all areas of law, to fully understand your rights you should consult an attorney.
