On August 6, 2024, Governor Maura Healy signed the Affordable Homes Act (the Act”), legislation whose purpose is to address rising housing costs within the Commonwealth by implementing public investment, changes to zoning policy, and tax credits. Tucked into the legislation was a small but significant change to Massachusetts General Laws Chapter 188, commonly known as the Massachusetts Homestead Law.
Background
The Massachusetts Homestead law permits a homeowner to shield the equity in their principal residence up to the maximum amount set forth in the statute. With certain exceptions, the law protects against attachment or levy on that equity due to judgments against a homeowner. All Massachusetts homeowners automatically receive $125,000.00 of equity protection in their principal residence. By taking the extra step of filing a Declaration of Homestead at the Registry of Deeds in the county where the property is located, previously homeowners could increase that exemption to $500,000.00 per residence. Under the Act, that amount has increased to $1,000,000 per residence.
In addition, any homeowner who is age 62 or older, defined as “elderly” under the statute, could claim a $500,000.00 homestead exemption by filing a declaration, effectively shielding an aggregate $1,000,000.00 in equity from creditors. That amount was increased under the Act to $1,000,000 for each elder homeowner for a total protection of $2 million per couple.
Impact of New Law on Homeowners
For those who have already filed a declaration of homestead, the law will apply retroactively, and no new filing is required to receive the increased homestead protection. Family members of homeowners who also reside in the property and who have declared a homestead will continue to receive the benefits afforded to them under the existing law.
Who Can Claim Homestead?
As discussed above, the Homestead law covers not just the primary owners of a principal residence but also extends certain protections to other members of the household who reside in the property. Additionally, those who own property via tenancy in common, certain trusts, or a life estate may also claim homestead protection. When a homeowner dies with a spouse and children who are not title holders, that homeowner’s homestead exemption will continue for their benefit and potentially shield against estate creditors.
Homeowners and others who file a Declaration of Homestead should note that a homestead does not replace insurance coverage and instead acts as an additional layer of protection against creditors. Even when a principal residence is sold, the homestead law continues to protect the homeowner’s equity in the proceeds for up to a year after the sale.
Because of the numerous benefits accorded to those who file a Declaration of Homestead, every homeowner should check with their local registry of deeds to ensure they have the maximum protection afforded to them by the provisions of the Homestead Act. Those who cannot go in person can check with their specific registry by going here and selecting the county where their property is located.
More information about the homestead law may also be found on the Massachusetts Secretary of State website.
Justin B. McCarthy is an Estate Planning & Administration attorney at the Boston-based law firm Conn Kavanaugh Rosenthal Peisch & Ford, LLP. He can be reached at jmccarthy@connkavanaugh.com
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