Homesteads and Dual-use properties

The June 11, 2018 edition of Massachusetts Lawyers Weekly reports on a recent Bankruptcy Court decision that interprets the Massachusetts Homestead law (MGL c.188). The facts of the case were that the debtor owned a two family house, lived in one half of the house with his family, and rented the other half to tenants. The debtor also ran a landscaping business on the property.

A creditor moved for an evidentiary hearing to determine whether the property “was predominantly used” for residential or for something else. This “predominantly used” language came from an earlier Bankruptcy decision which held that if a property was not used predominantly as a person’s primary residence, then the Homestead did not apply.

The judge in this new case, In re Shove, reached a different conclusion. She ruled that as long as the property met the definition of a “home” as set out in chapter 188 and also served as the primary residence of the Homestead declarant, then the Homestead applied to the entire property regardless of how the rest of the property was used.

While I am happy with this pro-homeowner ruling, Bankruptcy Court rulings are of limited weight when it comes to interpreting Massachusetts law. Until the Appeals Court or SJC issues a decision on this issue, we won’t know how state courts will rule.