Protections Afforded to Homeowners by the Massachusetts Homestead Act

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The Massachusetts Homestead Act allows homeowners to shield up to $500,000 of equity in their principal place of residence from claims from unsecured creditors (i.e. credit card debt).

Even in those circumstances where the property is held in a trust, the trustee/trustees can apply for the exemption as the Act includes in its definition of an "owner" the holder of a beneficial interest in a trust. While there is an automatic homestead exemption of $125,000, for a $35 filing fee a homeowner can record a Declaration of Homestead at the registry of deeds for the county in which the property is located to increase that exemption amount to up to $500,000. Of particular note, without exception, the homestead exemption is only applicable to a homeowner's principal residence, which Section 1 of the Act defines as being "the home where an owner, and the owner's family if applicable, resides or intends to reside as the primary dwelling; provided, however, that no person shall hold concurrent rights in more than 1 principal residence." For example, the spouse of a married homeowner, who has claimed the homestead exemption on the parties' principal residence, is prevented from claiming the exemption on the vacation home - unless that spouse can prove that the vacation home is his/her principal residence. The Homestead Act carves out certain exceptions so that even if a homeowner properly filed and recorded a Declaration of Homestead it would offer no protection against certain claims, such as those for unpaid taxes and liens (federal, state and local), for unpaid child support or alimony, nor for any lien recorded prior to the creation of the homestead. Given the correlation between home equity and retirement planning for the majority of homeowners, the exemption should not be overlooked.

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