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Massachusetts Homestead Act PDF Print E-mail

The rewritten MGL Chapter 188 becomes effective on March 16, 2011.  The purpose of this memo is to provide you with guidance in dealing with homesteads created on or after March 16, 2011 as well as the effect of the new law on older homesteads when closing residential real estate transactions.  The most important change in the law is that every owner of real estate occupied or intended to be occupied as a principal residence is entitled to an automatic homestead for the benefit of the owner and his or her family without recording or filing a declaration of homestead.

(To download  the Affidavit of Marital Status CLICK HERE )

Under the old statute there were two types of homesteads which were available.  Under the revised version of Chapter 188, we now have three separate homesteads which are available: Section 2 Homestead, “Elderly or Disabled Persons”.  This form of homestead is intended to provide exemptions to persons age 62 and older and to disabled persons in an amount of $500,000.  This homestead is created only by recording or filing a written declaration of homestead in the appropriate land records. Section 3 Homestead, “Declared Homestead Exemption”.  This form of homestead is similar to what was available under the prior act and is created by the recording or filing of a declaration of homestead in the appropriate land records.  The amount of exemption afforded under this homestead is $500,000. Section 4 Homestead, “Automatic Homestead Exemption”.  This entirely new homestead is an automatic homestead for the benefit of the owner and the owner’s family who occupy or intend to occupy the home as a principal residence. It requires no filing or recording of a declaration of homestead.  The exemption is in the amount of $125,000. Important changes to the Homestead Act 
  • The new law provides that an estate of homestead shall be subordinate to a mortgage encumbering the home if executed by all record owners of the home.  Section 9 of the new law specifically provides that the signature of the spouse who is not an owner will not be required on the mortgage.  This is a significant change from the prior law.  Note that this change applies only to mortgages and not to deeds.
  • Trustees of property held in trust can now file declarations of homestead on behalf of the beneficiaries of the trust who occupy the property as their principal residence.
  • Deeds conveying property covered by any form of homesteads to a non-family member must be signed by the owner and a non-owner spouse, former spouse, partner or former partner in a civil union residing in the home as a principal residence as of the date of the deed (c. 188 § 10 (a) (1)).  Since the new law clearly provides for the rights of former spouses living in the home, you should be checking the divorce records in the Probate and Family Court to determine if a divorce has been filed and if there are any orders relating to the homestead estate.
  • In addition to a deed, it is now possible to execute a separate release of homestead rights. The release must be signed by the owner and a non-owner spouse, former spouse, partner or former partner in a civil union residing in the home as a principal residence as of the date of the release (c. 188 § 10 (a) (2)).  Note again that the rights of former spouses are a concern.
  • Since it is now possible for homestead rights to exist in the case of a home the title to which is held in trust, the homestead right may be released by either (1) the execution of a deed or a release of the homestead by the trustee; or (2) action (deed or release) of a beneficial owner identified in the declaration, who is not a minor child (c. 188 § 10 (a) (4)).  
  • If a single person acquires a home and later marries, the new spouse is automatically protected by the declared homestead right (c. 188 §5(d)).  Therefore, in any transaction involving a deed, the marital status of the grantor must be determined and the release from the non-owner spouse must be obtained.
  • You must be particularly mindful of the relationship between the grantors and grantees in a deed.  Under Section 10(b) of the statute, no deed between spouses or former spouses or co-owners who individually or jointly hold an estate of homestead under section 3 or 4 and no deed between a trustee and a trust beneficiary or between a life tenant and a remainderman shall terminate the homestead unless each co-owner, spouse, former spouse or trust beneficiary entitled to the benefit of the homestead has executed an express release thereof pursuant to Sections 10(a) (2) and (4).
  • In the case of a sale of a residence to a good faith purchaser for value which is owned by a person who is not married, a deed, release or mortgage containing a statement of the marital status of the grantor may be relied upon by said good faith purchaser for value for purposes of releasing homestead rights (c. 188 §13).  Therefore, any deed, release or mortgage should indicate the grantor’s marital status and if the grantor has a former spouse, partner or former partner in a civil union who may have the benefit of the homestead.  
  • Section 13 of the statute provides that an affidavit executed and acknowledged by the grantor, releaser or mortgagor under the penalty of perjury stating that, at the time of the delivery of the deed, release or mortgage, the affiant had no spouse or former spouse entitled to claim the benefit of an existing estate of homestead shall be conclusive proof of the non-existence of such benefit at that time.  The statute states this affidavit may be recorded. Although the statute does not address the matter of couples in a civil union created in another state, the affidavit should address this possibility. 
  • Homestead rights apply to more than just single family residences under the new law.  Properties used as two to four family residences are now covered under the homestead law (c. 188 §1).
  • Section 14 of the statute provides that in all mortgage transactions, the closing attorney or settlement agent shall provide the mortgagor with notice of the right to declare homestead protection pursuant to the statute, receipt of which shall be acknowledged in writing by the mortgagor.  The notice shall include, but not be limited to, a summary of the differences between the automatic homestead protection and the enhanced benefits acquired by making a declaration of homestead.
  • The Act provides that all existing estates of homestead in effect on the effective date of the Act shall continue in full force and effect notwithstanding the repeal of any law under which they were created and shall be governed by the new Act, notwithstanding their failure to comply with the execution requirements of the new Section 5 (c. 188 §3).
  • Although not a concern for the purpose of issuing title insurance policies, you should be aware of the new execution provisions in Section 5 if you are drafting new homestead declarations.
  • It is now possible to abandon a homestead (c. 188 §10 (a) (3)).
             What you need to do at the closing table 
  • If you are closing on a refinance, existing homestead rights are not an issue.
  • In the case of a sale of a residence to a good faith purchaser for value where the seller is not married, a deed must contain a statement that the grantor is not married and has no former spouse, partner or former partner in a civil union who can claim the benefit of the Act.
  • In all transactions involving a deed, release or mortgage in which the marital status is stated as “unmarried”, an Affidavit of Marital Status must be executed by each grantor. Recording of the affidavit is at the discretion of the agent, but shall be kept in the agent’s file indefinitely.
  • If necessary, you may use a separate release of homestead executed by a spouse, former spouse, partner or former partner in a civil union.
  • In any mortgage transaction, the mortgagor must be provided with notice of the right to declare homestead protection pursuant to the statute, receipt of which shall be acknowledged in writing by the mortgagor.  The notice shall include, but not be limited to, a summary of the differences between the automatic homestead protection and the enhanced benefits acquired by making a declaration of homestead.
 If you have any questions, please feel free to contact our underwriting departments. Please be advised that supplemental bulletins may be forthcoming as the parameters of this new legislation evolve.
 
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