The previous law, M.G.L. c. 188, protected up to $500,000 of equity in a primary residence upon recording a declaration of homestead, but contained several confusing provisions that sometimes disadvantaged homeowners.
The new Homestead Legislation goes into effect on March 16th, 2011. Under the new law every Massachusetts homeowner will automatically receive $125,000 of creditor protection for the equity in their home, regardless of whether a homestead declaration is filed. Homeowners who file a declaration of homestead will continue to receive $500,000 of creditor protection. Moreover, the rules for filing a homestead declaration should be clearer, including that:
- Trust beneficiaries are able to secure homestead protection,
- A refinancing mortgage will not terminate previously filed homesteads,
- Proceeds from the sale of a home or insurance are protected,
- Spouses and co-owners who transfer property between and among themselves are protected, and
- Homestead protection is extended to manufactured homes.