On December 16, 2010, the governor of Massachusetts signed into law the most extensive changes to our homestead law in more than a generation ("The Act"). The Act (Chapter 395 of the Acts of 2010, rewriting M.G.L.c. 188) allows homeowners to choose between Automatic Homesteads, created without a declaration, and Declared Homesteads, available only when the homestead declaration is recorded. The effective date of the Act is March 16, 2011. While this memorandum bulletin is not intended to review all of the provisions of the Act, it does address the major provisions of the Act.
The Act recognizes homesteads created by individuals who intend to occupy homes as their principal place of residence. The individuals may hold the title to their home by themselves, as tenants by the entirety, as tenants in common, or as joint tenants. In addition, if a beneficiary of a trust that takes title to a home intends to occupy the home as his/her principal place of residence, the protection under the statute extends to the beneficiary (although the trust beneficiary must be identified in the homestead declaration as the beneficiary of the homestead). If a single homeowner subsequently marries, the spouse becomes entitled to the benefits of the homestead.
Once the individual acquires title to his or her principal place of residence, the interest so acquired becomes subject to an automatic homestead exemption under M.G.L.c. 188 §4. The amount of the automatic exemption is $125,000.00. Alternatively, the homeowners may choose to declare a homestead exemption. As long as both the homeowner and his/her spouse sign the declaration of homestead, the homeowner's interest in the home will be subject to an exemption in the amount of up to $500,000.00 (M.G.L.c. 188, §5). Special homestead exemptions continue to be available for the benefit of the elderly and the disabled (M.G.L.c.188, §2). Anyone who already has declared a homestead prior to the effective date of the Act will continue to be protected and the existing homestead will be governed by the Act.
The homesteads created under the Act will be automatically subordinate to mortgages encumbering the homes. There is no necessity to add to the mortgage the signature of the non-owner spouse for the subordination to be effective. Lenders are not allowed to request a release of homestead in connection with making a mortgage (M.G.L.c.188, §9).
The homestead may be released by a deed from the owner and the non-owner spouse to a non-family member. In addition, the estate may be released by either termination of the homestead, signed by both the declarant and the spouse, the recording of a new declaration, or by abandonment of the property as a principal place of residence. If the property is owned in trust, only the trustee needs to sign the deed or the release of homestead (M.G.L.c.188, §10). In order to establish the marital status of the grantor, the Act allows a good faith purchaser to rely on the statement of grantor's marital status in the deed or a mortgage (M.G.L.c.188, §13).
For more information please feel free to contact me anytime.
Jonathan J. Moriarty, Esq.
Law Office of Jonathan J. Moriarty
53 South Main Street, Ste. 3
Randolph, MA 02368
Telephone: (781) 961-2200
Facsimile: (781) 961-0017
Email: jjmoriarty@verizon.net
Website: http://www.attorneymoriarty.com/
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