A Declaration of Homestead can provide protection for a multi-use property.

A recent Bankruptcy case (in re Walter D. Catton, Jr.) provided an interesting perspective on a Massachusetts Declaration of Homestead. The court found that the Debtor’s multi-use property was protected by a Homestead. The subject property is a two-story (multi-use) structure where the debtor maintained his primary residence on the second floor while owning and operating an insurance agency on the 1st Floor. There are separate entrances for both the residence and the insurance agency.
The Bankruptcy court concluded that since the property was predominantly used for residential purposes it was therefore eligible for Homestead protection by the Bankruptcy Trustee. The decision cited that the square footage used for residential purposes was larger than the square footage used for commercial purposes and therefore the property was predominantly used for residential purposes and entitled to Homestead protection. It is important to note that the Court indicated that this was not a hard and fast rule but rather that the determination of residential or commercial “primary use” would be made on a “case by case” basis.
A Declaration of Homestead provides protection that can be an invaluable. We recommend recording a Declaration of Homestead for all principal residences in Massachusetts.
Attorney Christopher D. Knoth