The other day my wife and I refinanced our home. My wife properly asked me, the attorney, is our Declaration of Homestead still good? A declaration of homestead is a type of protection from creditors in the equity of a person’s principal residence. I am pleased to say, YES!
Effective on March 16, 2011, there was a new Declaration of Homestead reform legislation, which automatically provided this type of equity protection up to $125,000 (“Automatic Protection”). This Automatic Protection may be sufficient to protect the original equity in your house; however, it is not likely to be sufficient coverage to protect the full value of the equity of your home now. In order to protect the equity of your home up to $500,000 per residence, per family, you must file a document called a “Declaration of Homestead,” at the Registry of Deeds in the county where your property is located.
If you are over 62, or disabled there are added benefits to the Declaration of Homestead. A Declaration of Homestead is automatically subordinate to your mortgage. For homeowners that have previously executed a mortgage that included a waiver of the declaration of homestead protection (“Waiver”), the new law applies to the existing declaration of homestead. This Waiver shall be treated as a subordination, and the previously recorded declaration of homestead shall be in full force and effect. As a result, there is no immediate need to file a new Declaration of Homestead after you refinance, take out a second mortgage or a home equity loan. However, it may be advisable in certain circumstances. Under the new law, you can file a new Declaration of Homestead without any penalty because the subsequent Declaration of Homestead shall relate back to the previous Declaration of Homestead.
Needless to say there are numerous questions, which should be addressed. Of course, call me; or The Secretary of State’s Office has published a wonderful brochure called The Declaration of Homestead Act, which answers most, if not all, of these questions. (It can be found on line www.sec.state.ma.us/rod/rodhom/Declaration of homestead_q_and_a.pdf)