Scrutinizing portions of the new Homestead Law

Interest in the new homestead law continues at peak levels and we're still trying to decipher the meaning of many of the statute's section. Below we share our thoughts on the definition of "Declared homestead exemption" found in Section 1 of the new law. Our comments are in italics:

“Declared homestead exemption”, an exemption in the amount of $500,000 created by a written declaration, executed and recorded pursuant to section 5 (the section of the law that contains the mechanics of filling out the form); provided, however, that:

(1) with respect to a home owned by joint tenants or tenants by the entirety who are benefited by an estate of homestead declared pursuant to section 3 (regular homestead), the declared homestead exemption shall remain whole and unallocated, provided that the owners together shall not be entitled to a declared homestead exemption in excess of $500,000; (joint tenants and tenants by the entirety own “an undivided interest” in the property. That means each co-tenant owns the entire property subject only to the other co-tenant’s like interest. The “whole and unallocated” language means that each co-tenant has access to the full $500,000 exemption, but that’s also the total amount they can claim cumulatively).

(2) if a home is owned by tenants in common or trust beneficiaries, the declared homestead exemption for each co-tenant and trust beneficiary who benefits by an estate of homestead declared pursuant to said section 3 (regular homestead) shall be the product of: (i) $500,000; and (ii) the co-tenant’s or trust beneficiary’s percentage ownership interest; (Tenants in common and trust beneficiaries each own a percentage share of the property. For them, the maximum homestead exemption they may claim is their ownership percentage times the full exemption. If two tenants in common each own a 50% interest, the largest homestead exemption either could claim would be $250,000).

(3) except as provided in clause (4)(which is the following paragraph), each person who owns a home and who is benefited by an estate of homestead declared pursuant to section 2 (the elderly homestead) shall be entitled to the declared homestead exemption without reduction, proration or allocation among other owners of the home; and (meaning that every co-owner who declares an elderly homestead gets the full $500,000 exemption, regardless of how many other co-owners there are).

(4) separate estates of homestead may be declared pursuant to sections 2 and 3 on the same home (co-owners may file homesteads separately; they need not use the same form. Registered Land, however, may have different requirements), and in such event:

(5) (i) if the home is owned by tenants in common or trust beneficiaries, the declared homestead exemption for each co-tenant and trust beneficiary who benefits by an estate of homestead declared pursuant to section 3 (regular homestead) shall be calculated in the manner provided in clause (2)(co-owners allocate the $500,000 exemption amongst themselves based on their ownership percentage in the property), and the declared homestead exemption for each co-tenant and trust beneficiary who benefits by an estate of homestead declared pursuant to section 2 (elderly homestead) shall be calculated in the manner provided in clause (3); or (meaning that every co-owner who declares an elderly homestead gets the full $500,000 exemption, regardless of how many other co-owners there are).

(ii) if the home is owned by joint tenants or tenants by the entirety, the declared homestead exemption for the owners together shall be the sum of $500,000 multiplied by the number of declarations recorded pursuant to section 2 (elderly homestead), plus $250,000; (not sure where this comes from – perhaps the automatic $125,000 exemption doubled?)provided, however, that the homestead exemption under this subclause shall remain whole and unallocated among the owners; and provided further, that no owner who declares a homestead, acting individually, shall be entitled to claim an exemption of more than $500,000; and (what about joint tenants and tenants in common who claim an individual homestead exemption under the regular homestead? The calculation of this paragraph - $500,000 times the number of elderly homesteads – would yield zero if no elderly homesteads were involved. I’m not sure that’s the meaning or the intent, but that’s how I read it right now).

(6) the calculation of the amount of homestead exemption available to an owner shall not sever a joint tenancy or tenancy by the entirety.

As you can see from the above discussion, this single definition paragraph yields numerous questions that have no clear answers. Any opinions from our readers would be most welcome.