The Homestead Act

THE HOMESTEAD ACT

Questions frequently asked about how the act works:

1. What is the Homestead Act?
2. What does the Homestead act do?
3. What are exempted debts? Or What debts are not protected by a Homestead Declaration.
4. What does the Homestead Law mean by a disabled person?
5. Is the amount of the Homestead calculated from the base value of the real estate or the equity above the mortgage or prior to liens?
6. Do I have to file new Homestead every time I re-mortgage or take out a second mortgage or home equity loan?
7. How much does it cost to record a Homestead?
8. Can a trustee or trustees file for homestead protection?
9. Will my Homestead protect my home from being taken if I go into a nursing home?
10. Can I file a homestead if my primary residence is a mobile home?

I. What is the Homestead Act?

A. It is an interest in real property designed to protect the possession and enjoyment of the owner, surviving spouse and dependent children against the claims of creditors from execution and forced sale (foreclosure auction), as long as the person occupies or intends to occupy the property as his or her principal place of residence.

B. There are 2 types of estates in Homestead.
1. The Homestead has a value of $300,000.00 and for the benefit of the owner for his or her family. (Or sole owner) It must be occupied as a principal residence.
2. This type is for the elderly or disabled person 62 years of age or older. This Homestead has a value of $300,000.00 per person and may be declared by both spouses. It applies to the individual not the family.

II. What does the Homestead do?

A. Upon filing a Declaration of Homestead the real property that serves as an individuals principal residence is protected against attachment, levy on execution and sale for payment of debts for legacies, to satisfy non-exempted debts, to the extent of Three Hundred Thousand Dollars ($300,000.00) for a regular Homestead. For an elderly or disabled person Homestead the same protection applies up to Three Hundred Thousand Dollars ($300,000.00).

III. What are exempted debts? Or What debts are not protected by a Homestead Declaration?
A. Federal, state, and local taxes, assessments, claims and liens.
B. First and second mortgages held by financial institutions and others.
C. Any and all debts, encumbrances or contracts existing prior to the filing of a Homestead declaration.
D. An execution issued from the probate court to enforce its judgment that a spouse pay for the support of a spouse or minor children.
E. Where buildings on the land not owned by the owner of Homestead estate are attached, levied upon or sold for the ground rent or the lot whereon they stand.

IV. What does the Homestead Law mean by a disabled person?

A. A disabled person is defined as an individual who has any medically determinable permanent physical or mental impairment that would meet the disability requirement of supplemental social security. The necessary forms must be attached to the Homestead from Social Security Administration.
B. A letter from a licensed physician registered in the State (Massachusetts etc)

V. Is the amount of the Homestead calculated from the base value of the real estate or the equity above the mortgage or prior liens?

The law is unclear on this issue. Recent court cases suggest that the Homestead applies to the equity above any exempted liens or encumbrances.

VI. Do I have to file a new Homestead every time I re-mortgage or take out a second mortgage or home equity loan?

A. The Homestead statute exempts first and second mortgages from Homestead rights. In most cases, you would not have to re-file. Some mortgage forms limit the release of Homesteads rights to that particular transaction. In so doing, it negates the necessity of re-filing. Some lending institutions may require that your Homestead be released prior to their extending the refinance, etc.

VII. How much does it cost to record a Homestead?
The fee is $10.50 for recorded land and $30.00 for registered (land court) land in Massachusetts. It may be different in other states.

VIII. Can a trustee or trustees file for Homestead protection?
The Massachusetts Land Court has determined that registered land held in a trust cannot be given Homestead protection. There is no such limitation regarding recorded land.

VIII. Will a Homestead protect a home from being taken if I go into a nursing home?

NO. Liens imposed by the Massachusetts Department of Transitional Assistance are exempt from Homestead protection. This is due as a result of the department paying out Medicaid benefits.

X. Can I file a Homestead if my primary residence is a mobile home?

Yes. To acquire an estate for a mobile home, you must file at the city or town clerk’s office in the city or town in which the mobile home is located. Since it is private property, it cannot be recorded at the registry of deeds or recorder’s office.