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Declaration of Homestead
Protect Your Home
Several states provide an automatic Homestead
protection to the owner of property for his or her principal residence. However
in the Commonwealth of Massachusetts an owner (whether a sole owner, joint
tenant, tenant by the entirety or tenant in common) must record a Declaration of
Homestead with the Registry of Deeds for the County within which the property is
located in order to receive this valuable protection.
Massachusetts General Laws Chapter 188, Section
1 and Section 1A (disabled and elderly) provide that a Massachusetts homeowner
may file a Declaration of Estate of Homestead with a protection limit of up to
$500,000.00 in the land and buildings acquired by an owner of a home who
occupies it as their principal residence. The $500,000.00 exemption protects the
principal residence against attachment, levy on execution or sale to satisfy
debts. If the property is owned by a husband and wife the filing of the
Homestead by one of the named property owning spouses protects both spouses and
any minor children in the event of a catastrophic financial event. The
protection a Declaration of Homestead affords can be termed "God Forbid"
insurance. In short "God Forbid" you ever need the protection of the Homestead
but equally "God Forbid" if you do not have it and a situation arises where you
need the protection.
Perhaps the most common example of the utility
of the Homestead protection occurs in the nightmare situation where a property
owner has been involved in an automobile accident which causes serious injury.
The personal injury liability limits required by Massachusetts law are only
$20,000.00 in coverage. In the event of a catastrophic accident with serious
personal injury the recovery by an injured person can greatly exceed the
liability coverage amount for the automobile policy. If such a recovery were
ordered by a court (exceeding the policy limits) the injured party's attorney
will then look to the personal assets of the Defendant (usually the primary
asset being the family home). If a Declaration of Homestead has been recorded
the home cannot be attached, levied on execution or sold to satisfy the debt
during the period that the family resides at the property. In effect the
Declaration of Homestead can save the family home from a forced sale. The same
protection is also provided in the event of other lawsuit judgments (including
credit card debt). It is important to note that the statute lists six specific
items which are not covered by the Homestead protection 1) taxes (income and
real estate), 2) any debts or liabilities contracted prior to the filing of the
Homestead, 3) the debt contracted for the purchase of the home (mortgage on the
house), 4) an execution issued by the Probate Court for spousal or child
support, 5) buildings on land not owned by the owner and 6) executions (court
judgment) issued by a court of competent jurisdiction to enforce judgment based
upon fraud, mistake duress, undue influence or lack of capacity. All other
conceivable debts or liabilities are protected by the Declaration of Homestead
from the date of its recording.
The Massachusetts Homestead statute also
provides additional protection for elderly (defined as 62 years of age or older)
or disabled persons allowing the filing of a Declaration of Homestead for each
such owner and thereby providing protection in the amount of $500,000.00 for
each elderly or disabled owner. For example a husband and wife who are both over
62 should each file their own Declaration of Homestead. They are then each
protected for up to $500,000.00.
It is imperative to understand that the Homestead protection does not replace
the value of homeowner's and/or other liability insurance policies. It is,
however, a valuable supplemental protection in the event of a personal
catastrophe. Hopefully you will never need the protections the Homestead affords
however it is a relatively inexpensive and certainly a prudent course of action
to protect your interests. Once filed the Homestead remains in effect for as
long as you own the property and occupy it as your primary residence. Even if
you refinance the property, a new Declaration of Homestead will not be
necessary.
Contact an attorney or the Registry of Deeds
today and protect your most important asset - your family home.
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