In Massachusetts, homeowners and condominium owners may file a Homestead Declaration to protect $500,000 of equity in their property. It must be filed in the Registry of Deeds for the county in which the property is located. This document protects you from creditors or judgments against you in the event that you are sued. It does not, however, protect you against existing mortgages, long-term care claims for Medicaid payments by the Division of Medical Assistance, or existing claims or lawsuits.
The Declaration of Homestead is a relatively straight-forward document that is filed after being notarized. However, there are certain special situations that require attention. One of these is a situation where you purchase a home and then acquired property adjacent to it. In this case, all deeds must be referenced within the Homestead Declaration to capture the exemption on all property. Another situation might be when you purchase property, obtain a mortgage and then put a Homestead Declaration on record. If you then refinance and pay off the prior loan, the new mortgage and related documents may in fact release the Homestead Declaration previously recorded, thus requiring a new one to be recorded.
It must be noted also that a Homestead Declaration is only for property used as your principal residence. This protection doesn’t apply to a second home.
A common misconception is that the Homestead Declaration will protect you against catastrophic illness expenses. This is not the case. In fact, under the law, there is a specific exemption for long-term care expenses such as those incurred by nursing home or long-term care facility expenses that are paid by the State. If you have a Homestead Declaration and incur these expenses, the exemption will not protect your property.
If you own a two-family or multi-family dwelling, a Homestead Declaration may be filed on that property as long as you live in it as your principal residence. Naturally, when you sell property and then purchases replacement property, a Homestead Declaration must be filed on the new property, as the protection does not transfer from one property to another.
If your Homestead Declaration was filed previously, when the exemption was either $100,000 or $300,000, you need not file a new Homestead Declaration, as the current exemption of $500,000 includes those Declarations previously recorded.
By: Hyman G. Darling, Esquire