The Homestead Act

Massachusetts General Laws, Chapter 188 sections 1-10

And what it can do for you.

            Maybe a better heading would be “the Homestead Act – and what it means for you.”  In my practice I have encountered many misconceptions surrounding the act and its capabilities.  Instead of listing off all the things the act doesn’t do or the things people “heard” it does, I am going to get right down to exactly how you can benefit from it.

So what does it protect you from?  The Homestead Act protects your home from being sold to satisfy an unsecured debt.  Unsecured debt can come from things such as credit cards and judgments entered against you from car accidents or other suits.  It is debt that is not secured by a mortgage or lien on your property.

If you are under 62 and you are not disabled the act entitles you (married homeowners, single homeowner, or homeowner with a child under 18) to $500,000 in value of your principal residence that cannot be collected by creditors for unsecured debt.  For example, let’s say you ran up $60,000 of debt on your credit card that you were unable to pay.  The credit card company took you to court and won a judgment against you.  If you did not have this homestead protection, the credit card company could get an execution and levy on your home, effectively selling it to cover their costs and loss.

Now if you are over 62 years of age or disabled, then you and your spouse may file individual Declaration of Estate of Homesteads, each for $500,000.  The form for disabled persons and persons 62 and older is different than that of a regular Declaration of Estate of Homestead, so make sure that you file the correct one for your circumstances. 

This does not protect you from secured debt.  Secured debt is your first or second mortgage, or any other type of mortgage or lien which was recorded before you file for a Declaration of Estate of Homestead.  The lesson here is that if you do not pay your mortgage, the Homestead Act will not keep your house out of foreclosure.

Exemptions.  Before you get too excited about what a thirty five dollar filing fee can get you, there are still a few other things that the Act does not protect you from.  Things like:

1.       State, federal and local taxes, assessments, claims and liens,

2.      Judgments to pay child support or spousal support,

3.      Debts that were created before the homestead was filed,

4.      Medicaid liens (as of right now your home may be sold to offset your final medical costs if born by the Medicaid system)

5.      Any judgment based on fraud, mistake, duress, lack of capacity, and undue influence, and, as explained earlier . . .

6.      Mortgages that are secured by the property.

This Homestead Coverage is often termed “cheap insurance,” but I must stress that it is not insurance at all and doesn’t cover any of the things that typical homeowner’s insurance covers. 

Conclusion.  The Homestead Act is an important part of our laws and should be utilized by all Massachusetts homeowners.  For a filing fee of only thirty five dollars you get $500,000 in unsecured debt protection for your primary residence, and that protection lasts for at least the life of the person who files it, or until the home is mortgaged again.  For the price, you can’t beat it, even if you never need it.