Buying a house

Filing under the law limits how much of your home can be seized, foreclosed, or sold to pay your debts (with some exceptions).

By Claudie Bellanger, The Boston Globe

October 23, 2024 | 10:40 a.m.

It’s not often that someone offers such significant protection at low cost, so homeowners in this real estate market should take advantage, experts say.

In August, the Massachusetts Legislature signed the Affordable Homes Act, making a number of updates to the state’s housing laws to account for rising housing costs, including changes to the Homestead Act .

The Homestead Act is a hidden gem of housing legislation, a low-cost, high-reward initiative. Any Massachusetts property owner can file a property claim, which will exempt a portion of their property from creditors. All Massachusetts homeowners automatically receive protection of up to $125,000 without filing a property application, but this increases that protection eightfold.

With new changes to the Affordable Housing Act, obtaining a home now provides protection of up to $1,000,000 in equity/cash value in your home, double the previous limit .

“Everyone should have a property,” said Mark S. Einhorn, a partner at Marcus Errico Emmer & Brooks, PC, a law firm serving condominium and homeowners associations throughout the state. “Even if you have liability insurance, the typical homeowners insurance policy may only have $500,000 of liability. For most people, they protect their most expensive asset. A property is another layer of protection.

Property protection is not interchangeable with home insurance. Although insurance covers damages and liability, having a property gives you support in times of financial difficulty. Filing under the law limits how much of your home can be seized, foreclosed, or sold to pay your debts (with some exceptions). If you’re racking up credit card debt or facing a personal injury lawsuit, but you’re protected by the Homestead Act, fear not. Creditors cannot claim your primary residence for up to $1,000,000.

Many relief programs have some restrictions, but the Homestead Act is inclusive; Different types of households are eligible, including singles, married couples and those with dependents. The law also provides additional protection to certain parties, including persons aged 62 or older or persons with disabilities (regardless of age). Their real estate is protected against seizure, attachment, execution on judgment, taxation, or sale for payment of debts. The law also provides protection for spouses who are not listed as owners of the property and for family members who use the home as their primary residence.

Will declaring property protect your home from foreclosure if you move into a nursing home? The state says, “It depends.” All liens imposed by the Massachusetts Department of Transitional Assistance as a result of payment of Medicaid benefits are exempt from property protection. However, as long as the beneficiary or his or her spouse is alive, the Commonwealth will not look to residency for reimbursement for Medicaid benefits.

For more information, see the Secretary of State’s information page on the law: sec.state.ma.us/divisions/registry-of-deeds/homestead-faq.htm

Buy a house? According to the state, “If you are purchasing your new primary residence, your closing attorney must provide you, as the mortgagor, with notice of your right to declare property protection.” » A declaration of ownership is a relatively simple document that you file with the register of deeds in the county where the property is located.

“If the law offers you protection that won’t cost you anything, why wouldn’t you do it? » said Einhorn.

The cost? $35. The reward? Peace of mind.

Claudie Bellanger can be reached at (email protected).