REVISED HOMESTEAD ACT PROVIDES MORE PROTECTION FOR MASSACHUSETTS HOMEOWNERS

Newly enacted revisions to the Massachusetts Homestead Act increase the ability of homeowners to protect their homes from the claims of creditors. The changes allow homeowners to retain up to $1 million of the equity in their primary residence – up 500,000 under the old law.

This protection is significant. Consider the example of John, who is found to have been at fault in an accident that caused the death of another person. A court awards that individual’s family $1 million in damages. John has only $500,0000 in liability insurance, but he has $750,000 equity in his primary residence. Because the Homestead exemption puts up to $1 million of John’s equity beyond the reach of creditors, plaintiffs cannot order the sale of his house in order to satisfy their claim against him. The law doesn’t just protect homeowners; it also protects spouses who are not listed as owners and family members who use the home as their primary residence.

Needless to say, John (and perhaps his family) will be relieved to have this protection, but it is not automatic. Every Massachusetts home buyer automatically receives a homestead of $125,000 for which no action is required. In order to receive the $1 million of protection for which they are now eligible, however, homeowners must sign a formal “declaration of homestead” and record it at the Registry of Deeds.

The cost for this protection is only $35; the peace of mind it provides is invaluable.

That was the point MEEB Partner Mark Einhorn made in a Boston Globe article in which he was quoted. “Everyone should have a homestead,” he said. “If the law is offering you protection that’s essentially free, why would you not do it?”

If you have questions or concerns regarding the Homesteads, please reach out to Mark Einhorn directly at meinhorn@meeb.com.