Governor Patrick signs new Homestead Law

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.

4 Responses to Governor Patrick signs new Homestead Law

  1. Bala Gopal says:

    Thanks for this excellent information. You have indicated that the new law goes into effect only 90 days from Dec 17, 2010 (when it was signed by the Governor). I have an existing homestead and I refinanced on Dec 14, 2010. Should I go ahead and file a new homestead because the new law is not yet in effect?

    Thanks in advance.

  2. DickH says:

    I really can’t give you advice about your specific case because every case is different, but the new law makes it pretty clear that all existing Homesteads will be “grandfathered” into the new law.

  3. Laurie says:

    As a beneficiary of a trust, which owns the property I reside in, can I now file a homestead on the property myself or does the trustee file the homestead.

    Thank you in advance.

  4. DickH says:

    I haven’t seen the version of the law that the governor signed so I can’t tell you what that says about trusts. The earlier version that I have says “if a home is owned in trust, only the trustee shall execute the declaration.” But there are other requirements that anyone who is entitled to the protection of the homestead be listed on it. I think in the 90 day period preceding the law’s effective date, there will be much discussion about the questions of the type you ask here. As I see/hear answers to these questions, I’ll try to post them here.