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The Homestead Exemption
What It Could Mean To Your Family

The Homestead Exemption or the "Declaration of Estate of Homestead" provides protection and security to homeowners, eliminating the threat that the equity in their principal residence could be exposed to satisfy common debts or obligations. This is a simple mechanism, yet most homeowners are not familiar with it, and it is an underutilized law that allows homeowners to protect certain equity in their principal residence from the majority of creditors.

Massachusetts General Laws Chapter 188, § 1-10 as originally written allowed an owner of real estate, for the benefit of themselves or their family, to exempt Five Hundred Thousand Dollars ($500,000.00) in home equity from attachment, levy on execution, or sale for payment. In other words, it eliminates the threat that the equity in your principal residence could be exposed to satisfy "common debts" or obligations.

As of March 16, 2011, the NEW Massachusetts Homestead Act completely rewrites Chapter 188, § 1-10 providing home owners more modern protection.

Here are some of the important changes to the new Homestead Declaration Law:

  • Existing homesteads remain valid.
  • There is an automatic $125,000 homestead; no recordation of a homestead declaration is needed for this protection.
  • Homeowners receive a $500,000 homestead protection by recording a homestead declaration; all owners must sign to gain the protection. There is a one-time $35.00 recording fee.
  • All owners must occupy or intend to occupy the home as principal residence.
  • Owners who are elderly or disabled should file a homestead under section 2 of the new law to gain maximum protection.
  • Under new law, both spouses can record a homestead.
  • Property held in trust can be homesteaded.
  • Every homeowner who has refinanced his/her mortgage in the last several years should record a new homestead declaration since many refinancing mortgages contained a waiver of homestead rights.
  • If a married couple has divorced or separated, each should re-examine whether a new homestead declaration is needed.
  • As under prior law, homestead declarations are subject to mortgages executed by all owners.

There are other changes in the new law, but these are some of the important ones. I suggest that any homeowner contemplating a Declaration of Estate of Homestead for a principal residence should consult with their attorney with any questions. Under the new Massachusetts Homestead Act closing attorneys or mortgage settlement agents are required to obtain written proof that they have informed borrowers of their right to declare a homestead. The attorney or settlement agent must also discuss the difference between an automatic and a declared homestead that provides additional protection.

Here is a link to the new Massachusetts Declaration of Estate of Homestead Law.

To learn more about the NEW Homestead Exemption Law in Massachusetts, follow this link to The Homestead Act Question & Answers. Changes to the Q&A are currently being made to reflect the new Law.


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