Big changes coming to Homestead Law

Senate Bill 2406 has made its way through both houses of the legislature and is heading to the Governor's desk for signature. This bill makes some much needed changes to Massachusetts Homestead law. It's a radical change in a very good way. Here are some of the highlights:

All homeowners will receive an automatic homestead exemption of $125,000 without having to do a thing. Homeowners may also obtain a "declared homestead exemption" of $500,000 by filing a written declaration at the registry of deeds. Any existing homesteads will automatically be considered "declared homestead exemptions" under this new law. The "elderly and disabled" homestead will still exist as a separate section. On my first reading of this bill, I believe it expressly allows each co-owner with an elderly homestead to use the full exemption whereas with the "declared" homestead for those under the age of 62, the exemption must be apportioned among all the co-owners.

The homestead form itself will have to change. The new law requires the homestead to identify each co-owner to benefit from the homestead (plus the owner's "non-titled spouse"), the declaration shall state under the penalties of perjury that each person so named intends to occupy the home as their principal residence, in the case of spouses who both live in the house, both must sign the homestead. The new law specifically allows homesteads to be declared on property held in trust (in which case the trustee would be the only one to sign).

The new law also clears up the long-lingering question of whether you must file a new homestead after you refinance. The answer is unequivocally NO. In fact, lenders are specifically prohibited from having borrowers sign anything that waives or releases a homestead as a condition of the mortgage since that's what this bill accomplishes. Also, the bill requires all closing attorneys to notify clients in writing with a signed receipt of the availability of the "declared homestead."

The bill is quite comprehensive but that's enough for now. I'll try to ascertain when it might be signed into law. For now, here's the full text of the amended bill.