In an exciting update for homeowners, the recently passed Affordable Homes Act has quietly introduced a big change: the Massachusetts Homestead Exemption has jumped from $500,000 to a whopping $1 million! This is fantastic news, especially for those looking to protect their homes. Here’s the best part – this change applies retroactively. So, if you’ve already filed a Declaration of Homestead, you’re automatically covered by the new $1 million cap. No need to refile or do anything extra.
What is a Homestead Declaration?
Simply put, a Declaration of Homestead is a form you record at the registry of deeds. It acts like a protective shield for your home’s equity, safeguarding it against certain creditor claims. Imagine this scenario: you get into a terrible car accident, and your insurance doesn’t fully cover the damages. The person who sued you might try to go after your house to make up the difference. But if you have a Homestead Declaration in place, your home is protected—now up to $1 million!
Automatic Coverage or Full Protection?
According to William P. O’Donnell, Norfolk County Register of Deeds, if your home is your primary residence, you already have automatic protection of $125,000. But if you want the full protection up to $1 million, you’ll need to officially file a Declaration of Homestead. This extra layer of protection helps shield your home from being forced into a sale to satisfy debts like unsecured loans or certain legal claims. Given that for most of us, our home is the most valuable thing we own, it makes sense to take this simple step to protect it!
Elderly Homestead Protection
For those aged 62 and over, there’s even more good news. The Elderly Homestead Declaration offers $1 million in protection per person. So, if both you and your spouse qualify, that’s double the coverage!
Other Cool Features of the Homestead Law
The Homestead Law isn’t just limited to traditional homes either. As of 2011, the law expanded to cover primary residences held in trusts and even mobile or manufactured homes. Plus, refinancing your mortgage won’t cancel out your Homestead protection anymore, which is a relief for anyone looking to get better loan terms.
If you decide to sell your home, the law also protects the proceeds from the sale for up to a year, or until you buy another home—whichever comes first. And if, heaven forbid, your home is damaged by something like a fire, the insurance payout is also protected for two years or until you rebuild or buy a new place.
But, Beware of Certain Exemptions!
While this law provides excellent protection, it’s not a get-out-of-jail-free card for all debts. Things like federal, state, or local taxes, along with mortgages, still take priority. If you owe money on a mortgage you took out to buy your home, that debt isn’t protected under the Homestead Act. The same goes for things like nursing home liens, child support, and spousal support. But, for most other debts, this law offers a valuable safety net.
How to File a Declaration of Homestead
Filing a Declaration of Homestead is super easy. It can be done at your local Registry of Deeds for just $36—a small price for such big protection.