Image: A home in Cape Cod, MA. Source: Nathan Anderson on Unsplash.
Massachusetts Updated the Homestead Act: Here’s What That Means for Homeowners
In August 2024, Massachusetts enacted the Affordable Homes Act, which provided $5.1 billion in funding for affordable housing, made it easier for homeowners to create accessory dwelling units (ACUs), and created policies encouraging housing production. The law also included significant updates to the state’s Homestead Act.
The most notable change was an increase in the “homestead exemption limit.” The act now provides homeowners with protection for up to $1,000,000 in equity or cash value of their homes if they file as a homestead. This protection is specifically against financial hardships and is not a replacement for homeowners’ insurance.
This change has far-reaching implications for homeowners across the state, offering enhanced protection for their most valuable asset: their homes. Here, we’ll explore what it means to file under the Homestead Act and why it’s such a significant development for Massachusetts homeowners.
About the Massachusetts Homestead Act
The Massachusetts Homestead Act was passed by the Massachusetts Legislature in 1851. It is codified in Massachusetts General Laws Chapter 188 and provides significant protection for homeowners by shielding a portion of their home equity from creditors. The law automatically protects up to $125,000 in home equity without any filing requirement.
However, homeowners can increase this protection by filing a declaration of homestead with their local Registry of Deeds. Before August 2024, homeowners could file for up to $500,000 in protection, but the Affordable Homes Act doubled that. Homeowners can now file for up to $1,000,000 in protection under the act.
Previous Revisions and Updates to the Homestead Act
The law has undergone several revisions over the years to modernize and improve its provisions. A significant update occurred in 2010, which clarified and expanded homestead protections. This revision allowed both spouses to file for homestead protection, eliminated the need to re-file after refinancing, and extended coverage to homes kept in trusts.
The protection now extends to various types of residences, including single-family homes, multi-family dwellings up to four units, condominiums, mobile homes, and cooperative housing units.
Further updates were made in 2022 to improve and modernize the information technology systems and capacities of the Judiciary, which included updates to the Homestead Law. The most recent change, of course, occurred in 2024, increasing the homestead exemption limit.
Should You File Under the Homestead Act?
Many legal experts strongly recommend that all Massachusetts homeowners take advantage of the Homestead Act’s protections. According to an article on Boston.com, Mark S. Einhorn, a partner at Marcus Errico Emmer & Brooks, P.C., believes that “everyone should have a homestead.”
“Even though you have liability insurance, the typical homeowner’s policy might have only $500,000 in liability,” says Einhorn. “For most people, they are protecting their most expensive asset. A homestead is another layer of protection.”
Massachusetts homeowners who want to file under the Homestead Act must file a “Declaration of Homestead” under the law. You can find the forms to do so at the Massachusetts Secretary of the Commonwealth website.
You can also get the forms here:
- Declaration of Homestead for Homes Owned by Natural Persons Form (PDF)
- Declaration of Homestead for Homes Owned by Trustee(s) Form (PDF)
Once you complete the correct form, submit it to your local registry of deeds. You can find your city’s or town’s Registry of Deeds office by searching the Registry of Deeds database.
It only costs $35 to file, a good deal for up to $1 million of protection.
Who is Eligible to File?
According to the Secretary of the Commonwealth of Massachusetts, you should be eligible to file a homestead declaration if you own and occupy (or intend to occupy) your home as a “principal residence.” Owners may include sole owners, joint tenants, tenants by entirety, tenants in common, life estate holders, or holders of a beneficial interest in a trust.
If your home has multiple owners, either as tenants in common or trust beneficiaries, the law’s benefits will be split among the owners in proportion to “their ownership interests.” Essentially, they’ll each get protection that matches their existing stake in the home.
Since the update to the law in 2024, manufactured and mobile homes are now eligible for protection. The law protects married people, unmarried people, and minor children under the age of 21.
If a parent who declares a homestead passes away, the law protects the family’s rights to use the home.
The Homestead Act’s Limitations
While the Homestead Act offers substantial protection, it’s crucial to understand its limitations. The act does not shield homeowners from all types of debt or legal claims. Notably, it doesn’t protect against:
- Mortgage-related debts
- Federal, state, and local taxes
- Court-ordered support payments
- Debts incurred before filing the homestead declaration
Additionally, the protection may not fully safeguard a home from being taken if the owner enters a nursing home. The Massachusetts Department of Transitional Assistance can impose liens for Medicaid benefit payments that are exempt from homestead protection.
However, as long as the recipient or their spouse is alive, the Commonwealth typically won’t seek reimbursement from the residence.
It’s also important to distinguish the Homestead Act from home insurance. Insurance covers damage and liability, while the Homestead Act provides support during financial hardships by protecting the owner’s equity in the home. Both types of protection compliment each other, but they are not a replacement for the other.
Buy and Protect Your Next Massachusetts Home
The update to the Massachusetts Homestead Act provides greater financial security for homeowners in the state. By doubling the protection limit, homeowners now have more robust protection of the equity they’ve earned in their homes, offering peace of mind.
While the Homestead Act is not a cure-all for financial troubles, it certainly serves as a valuable tool for homeowners.
To learn more about buying and protecting a home in Massachusetts, contact us at GoldCoast Mortgage today.