The Homestead Law Explained
The Homestead Law – Explained
A "Homestead": A legal document that protects the equity in your home from creditors. That explanation was pretty painless, huh? Ok, I can give you more fine print than that!
The reason for this article is because there has been some recent changes to this law by Governor Duval Patrick, and so it is an opportunity to explain this existing law and the new sections.
Here is the more technical explanation of the Homestead Law:
This declaration is a legal document filed at the registry of deeds that informs the public that the homeowner is asserting his/her rights to protect the equity in the home from subsequent creditors.
Upon filing a Declaration of Homestead, a person’s primary residence is protected against subsequent attachment, suit, or bankruptcy to the extent of five hundred thousand dollars ($500,000) of equity per residence, per family.
Now for the 2 major changes:
1. Starting March 2011, every home has automatic protection of $125,000 even without filing with the courthouse. The maximum coverage of $500,000 still requires a legal document to be recorded.
2. When a person sells a home, this equity protection of the Homestead remains on the proceeds of the sale for a period of one year, or whenever the next home is purchased, whichever is sooner.
Go to the source article at The MAR Report (Massachusetts Association of Realtors) for more details.
Many of our preferred closing attorneys consult with buyers prior to closing on their new home, but if they don't mention it, please insist on this low cost protection. For specific questions or to put a Homestead on your home, we recommend Tony Buono of Black & Buono. Tony can be reached in Framingham at 508-879-0789 or www.BlackandBuono.com.
Ed Daniels with The MAhome Team of Realty Executives lives in Holliston MA. For any guidance regarding the issues of buying and selling homes around Metrowest, he can be reached at Ed@MAhome.com or 508-341-7880.
Ed Daniels, Realty Executives - Boston West
The MAhome Team,Southboro, MA
Cell: 508-341-7880
Find me/Fax me: 508-471-4100
It means no one can touch the money you make on selling your home - for a year. The equity is the value of your home minus what you owe in mortgage - and that cannot be taken from you in lawsuit. Hope that helps!
Doriane | 2011-01-12 16:36:09
I think I need to "For dumber dummies" version of this article. Some of these terms are still a mystery to me "equity protection of the Homestead remains on the proceeds of the sale for a period of one year." Huh? "protected against subsequent attachment, suit, or bankruptcy" (??)
Mark | 2011-01-12 10:59:41