The Massachusetts Homestead Law is a very useful law that was put into place as a protection of homeowners’ property. The law may protect your home against the claims of creditors. The act applies to your home if:
It does protect manufactured and mobile home
Homestead protection does not stop your home from being foreclosed on in the event that you don’t pay your mortgage
You must declare that your property is a homestead property in the state of Massachusetts. This declaration will protect the equity value of your home from creditors. The equity of your home is what the “fair market value” of the home is. To calculate this value, find out what the value of your home is, then subtract all home equity loans, liens, and mortgages that you have against the house. The number that’s left is what the equity value of your home is.
When a Declaration Of Homestead is in place, you’re protected from creditors who would otherwise force you to use your equity so that you you can repay the debts that are owed. Without this protection, creditors can foreclose on your home. The only creditors that a Homestead does not protect you from are home loan companies, the IRS and legal child support obligations.
A creditor cannot auction your home if you, other owners of your home, any family members, or any family members who move into your home at a future date live there. This means that even in the event of your death, these people will all be protected from creditors taking value from the property while they are living on the property.
Any family members who have debts and are living in the house are also protected under the Homestead Act in Massachusetts.
$125,000 is automatically protected.
A Homestead Declaration needs to be filed for up to $500,000 of protection to be initiated.
You’ll need to go to the Registry Of Deeds in the county where the property is located in Massachusetts to file a Declaration Of Homestead. The document will need to be notarized and there is a fee associated with filing. You may be asked if you’d like to file the Homestead Protection during the purchase agreement signing for your Massachusetts home. Note that if a lien was put on your property before the Homestead Declaration is filed, you are not protected.
Talk to your real estate attorney and realtor for more details and information on how to file a Homestead Declaration when you purchase your Massachusetts home.