Earlier today Governor Patrick signed into law a major revision to the state’s Homestead statute that was enacted by both houses of the state legislature a short time ago. With the governor’s signature, the new law will take effect 90 days from today. I’ve previously written about some of the contents of this new law, but the major changes are these: All homeowners receive an automatic homestead exemption of $125,000 without doing filing anything. A homeowner may obtain enhanced protection of up to $500,000 by filing a Declaration of Homestead form at the local registry of deeds (that’s the exemption amount under existing law). All existing homesteads will be grandfathered in under the new law. The new law also makes it clear that when a homeowner refinances or obtains a home equity loan after recording a homestead, that new mortgage has no adverse effect on the existing homestead. In other words, there’s no need to record a new one. The new law also states expressly that property that is held by a trust may be the subject of a homestead, something that was open to debate under the old law. The new law also clarifies the relationship between the homestead and joint owners of property, both for spouses and unmarried joint owners.
Besides the automatic homestead, the major new consumer-friendly provision allows a homeowner to sell a personal residence that is protected by a homestead and to apply the homestead’s protection to the proceeds of that sale for the shorter of one year or whenever a new personal residence is purchased. This means that someone who is in debt but who has a homestead, is not trapped in his house but may move to new quarters that may be cheaper or closer to a job. Under the old law, the homestead only protected the house and so as soon as it was sold, the creditor could seize the proceeds from the sale.
There are many other provisions of the new law. From now until the time it takes effect ninety days from now, there will be much discussion about the meaning of the new language. For now, it’s safe to say that this is a change in the law that is helpful to home owners.