Homestead Protection of Sale Proceeds

A lawyer called last week to discuss how provision of the Massachusetts homestead law might be interpreted by the bankruptcy court. She was referring to the following section which was created by chapter 395 of the Acts of 2010. That’s the major homestead revision from 2011 that created the automatic homestead, clarified the applicability of the law to property held in trust, and settled a number of other ambiguities about prior homestead law.

The new provision that caught me by surprise was this one:

Section 8. (a) If a home that is subject to an estate of homestead is sold, whether voluntarily or involuntarily, taken or damaged by fire or other casualty, then the proceeds received on account of any such sale, taking or damage shall be entitled to the protection of this chapter during the following periods:

(1) in the event of a sale, whether voluntary or involuntary, or a taking, for a period ending on the date on which the person benefited by the homestead either acquires another home the person intends to occupy as a principal residence or 1 year after the date on which the sale or taking occurred, whichever first occurs; and

(2) in the event of a fire or other casualty, for a period ending on: ( i ) the date upon which the reconstruction or repair to the home is completed or the date on which the person benefited by the homestead acquires another home the person intends to occupy as a principal residence; or (ii) 2 years after the date of the fire or other casualty, whichever first occurs. 

In other words, if you sell a house that is protected by a homestead, the cash you receive from the sale is protected from creditors by the same homestead for up to a year. The provisions for protecting the proceeds from an involuntary sale, a taking or a loss that’s compensated by insurance make sense to me – why should you be dispossessed by circumstances beyond your control? – extending the same protection to a voluntary sale is something I find harder to accept. Still, the language of the statute is fairly specific so its intent seems clear. Thus far, I have not heard of a case that has taken advantage of this provision.

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.

Homestead exemption amounts thru the years

Since 2011, homeowners in Massachusetts have an automatic homestead that protects up to $125,000 in the equity of the family residence. If the homeowner files a Declaration of Homestead at the registry of deeds, the exemption amount rises to $500,000.

The exemption amount wasn't always that high. Prior to 1939, it was $800. Here is how it has risen through the years:

• 1939 - increased to $4,000
• 1970 - increased to $10,000
• 1973 - increased to $20,000
• 1974 - increased to $24,000
• 1975 - increased to $30,000
• 1979 - increased to $50,000
• 1983 - increased to $60,000
• 1985 - increased to $100,000
• 2000 - increased to $300,000
• 2004 - increased to $500,000

These are the amounts for the "regular" homestead. At some point, a separate homestead for the "elderly or disabled" was created. Through the years, the "elderly" homestead has either had a higher exemption amount or has been applied more favorably to the homeowner.

For information about the Declaration of Homestead, check out Massachusetts General Laws chapter 188. 

Long reach of Massachusetts homestead law

The November 7, 2016 issue of Massachusetts Lawyers Weekly reports on a bankruptcy court decision that construed the automatic homestead exemption under Massachusetts law to extend to property outside the Commonwealth. In Re: Paul Reynolds St. James involved a man who filed Chapter 7 bankruptcy in Massachusetts. The debtor rented property in Massachusetts, but owned a condominium in Florida and at an evidentiary hearing, asserted that he intended to make the Florida condo his personal residence. Because he owned no real estate in Massachusetts, the debtor had never recorded a declaration of homestead at a registry of deeds.

The Bankruptcy judge ruled that when the Massachusetts legislature enacted the automatic homestead in 2011, there was nothing in the statute that limited its usage to real estate in Massachusetts. The judge held that this silence as to the statute's extraterritorial application, plus the Supreme Judicial Court's general rule that ambiguities in homestead law should be resolved in favor of the debtor, led him to conclude the Massachusetts automatic homestead could be used to protect real estate outside of Massachusetts from creditors, provided the debtor could prove that he either used or intended to use the out-of-state property as his primary residents.

The bankruptcy trustee disagreed with the decision and is contemplating an appeal.

Homestead seminar in Billerica this morning

Today I traveled to the Billerica Council on Aging to talk about the homestead.  More than 30 people attended and we had a lively discussion about the Massachusetts homestead and related real estate issues.  Quite a few of the attendees had previously recorded homesteads and were curious to learn if they had to record new ones since the law changed in March of 2011 (the answer to that is no in almost all cases since the new law grandfathers in existing declarations).  Because this event took place at the Senior Center on a weekday it was predictable that the crowd would tend to be on the older side, so there were several questions about homesteads and the payment for stays in nursing homes (liens for money owed to the government are exempt from homestead protection).  Still other questions involved transferring an interest in real estate to adult children or into trust.

For more information about the Declaration of Homestead check out the Massachusetts Law Library website. 

SJC decides homestead case

Last week the Massachusetts Supreme Judicial Court issued an opinion in a case (Boyle v Weiss, SJC-10933) that came to it via the certification of a question by the Bankruptcy Court.  The question was whether the owner of a beneficial interest in a trust who lives in the trust property acquire an estate of homestead in the property?  Based on the law prior to the March 16, 2011 amendment (which was the law governing the homestead in question), the SJC held that the beneficiary could not acquire a homestead under those circumstances.

The relevant homestead statute (since amended) allowed (1) an owner or (2) one who occupies "by lease or otherwise" to acquire a homestead.  The court noted that the same statute defined "owner" as "a sole owner, a joint tenant, a tenant by the entirety, or a tenant in common."  The plaintiff here fell into none of these categories.  The second status - "by lease or otherwise" - was last interpreted in a case decided during the Civil War (Thurston v Maddocks) which held that a homestead could not be acquired by one holds owns only an equitable interest in the property.  The SJC today relied on that holding to reject the "by lease or otherwise" language as a type of "catch-all" for new homesteads. 

In a series of footnotes, the SJC made it clear that while the March 16, 2011 amendment does specifically allow homesteads to be acquired by owners of a life estate and trustees, the homestead in question would still not be valid because it was executed by the beneficiary and not by the trustee as is required by the new law.  The court also stated that since the homestead was invalid when it was first recorded, it could not be revived by the 2011 amendment which said old homesteads continue in full force under the terms of the new law.

Homesteads and an uncooperative spouse

Someone recently asked a question (which I paraphrase below) about the new homestead law:

I noticed that the new Declaration of Homestead law requires both spouses to execute the document.  What happens in a case where the spouses aren't getting along and one spouse refuses to sign the form.  Does this mean the other spouse is precluded from obtaining a homestead? 

I don't believe the law addresses this scenario, but laws can't cover every possible set of facts so often the answer to a question like this must await an appellate court decision on each unique issue that arises.  That works well for everyone except the guy who has to be the first to litigate the issue.

Absent such a court decision, here's how I would analyze the question posed: Section 5 of Chapter 188 (the Homestead law) would apply. While section 5(a)(3) specifically states that where the property is jointly owned by a married couple, the homestead "shall be executed by both spouses."  But section 5(a) says it shall be signed "by each owner to be benefitted by the homestead."  If one spouse is not interested in obtaining a homestead, it would make no sense to prohibit the other from doing so just because of the recalcitrant spouse.  And I assume the empahsis on both spouses signing is because that's the exact opposite of the case under the prior version of the homestead law which only allowed one spouse to sign. 

If I was an attorney advising a client in this situation (which I most definitely am not - this is just speculation) I would say to fill out the homestead in his own name, make a note somewhere on it that the property is co-owned by SPOUSE but that she refuses to sign and he wishes to obtain a homestead on his interest in the property then I would record that.  But, if such a homestead were ever challenged, it would signal the start of a lengthy period of litigation over the issue

Deeds and Homestead releases

We're starting to see some documents come across the recording counter containing the caption "Affidavit Related to Homestead Pursuant to MGL c. 188, s.13" which states:

Section 13. A deed, release or mortgage containing a statement of the marital status of a grantor may be relied upon by a good faith purchaser for value. As to acts undertaken in good faith reliance on such deed, release or mortgage, an affidavit executed and acknowledged by the grantor, releaser or mortgagor under penalty of perjury stating that, at the time of delivery of the deed, release or mortgage, the affiant had no spouse then entitled to claim the benefit of an existing estate of homestead, shall be conclusive proof of the nonexistence of such benefit at that time. The affidavit may be recorded in connection with the execution and delivery of a deed, release or mortgage and shall be accepted in the appropriate registry of deeds and registry district of the land court. The subsequent residency or renewal of residency in the home by a spouse of the grantor, releaser or mortgagor shall not defeat the priority of a mortgage, release or conveyance accepted in reliance on such affidavit.

As I understand it, simply by living in the home, a non-titled spouse, possesses a homestead estate in the property that cannot be defeated by the title-holding spouse.  Let me illustrate: Husband holds title in his own name with wife using the property as her personal residence.  Simply by reason of (1) her status as spouse and (2) her occupancy of the home, she automatically has an estate of homestead in the property under the automatic homestead provisions of the 2011 law.  This means that should the husband convey the property to a third party, that conveyance does not defeat the wife's homestead rights.  In fact, her right to occupy and use the home would be superior to that of the new owner.

To protect against this, deeds to property owned by just one spouse should also be signed by the non-titled spouse in order to release those homestead rights.  But how does anyone know whether a sole owner of property has a non-titled spouse?  That's the purpose of this affidavit.  Here's an example of one that involved not a spouse-seller, but an executor of an estate/seller:

I, Mary Jones, execturix of the estate of Jane Doe, do under oath depose and say that at the time of the Decedent's death, she had no spouse entitled to claim the benefit of the existing estate of homestead in and to the property located at 360 Gorham Street, Lowell.  Executed under the penalties of perjury this 7th day of January 2012.

The above cited-statute certainly allows for this kind of affidavit and makes it legally effective.  One problem, however, is the added cost for the $75 recording fee.  It's too bad that the revised homestead law, intended to help consumers, now imposes on some an additional charge of $75 to sell their homes.  It would be better if the legislature, the legal community, and the registers of deeds all agreed to have this additional affidavit embedded in the deed itself and to not charge an additional fee for it.  That would deal with the title issue while not imposing an additional cost on home sellers.
 

Billerica Homestead Seminar

Today Tony and I traveled to the Billerica Council on Aging to talk about the Declaration of Homestead.  An overflow crowd of 32 gathered to hear a brief presentation on homestead basics and a discussion of changes that occurred with a major amendment to the law back in March.

Many of those in attendance already had homesteads recorded but they had heard about the new law and were anxious to learn how it might effect them.  While we can't answer specific questions, we can offer general commentary about the law.  If anyone would like to schedule a homestead seminar for their group or organization, just send an email to lowelldeeds[at]comcast.net.  All that is needed is a meeting space big enough to accommodate the expected crowd.

Deeds and the release of homestead rights

Increasingly deeds presented for recording contain waivers or releases of homestead. Some are embedded in the text of the deed; others accompany as an attachment. I believe this new trend is a result of the automatic homestead contained in the major revision to our homestead law that occurred back in March. In cases where two spouses jointly own a home and both sign the deed conveying the property, no issue of lingering homestead rights should arise. But where the property is owned by only one spouse, the other would be granted rights in the property by the automatic homestead. When it comes time to sell the property, only the title-holding spouse would normally sign the deed. In such a case, it would seem that the non-titled spouse's homestead rights would continue uninterrupted. To put an end to those rights, attorneys increasingly are having the non-titled spouse sign something that clearly relinquishes any such homestead rights. To me, this is a bit of a throwback to the age of dower, that ancient practice that protected the property rights of the wife in the event of the earlier death of the husband. If you look at almost any deed from the 19th century, you will see that the non-titled spouse "releases rights of dower." I see this new homestead-releasing practice as being much like that practice. Here at Middlesex North, we're treating this kind of release of homestead as a basic part of the deed and are not deeming it to create a "multiple document." I suspect at some other registries, the multiple document rule will be invoked and the fee for such deeds will become $125 for the deed and $75 for the release of the homestead for a total recording fee of $200.

Homesteads on manufactured homes

A little noticed provision of both the old and new homestead law allowed the owner of a "manufactured home" - which I believe includes mobile homes of the type that sit in "mobile home parks" and serve as the primary residence of inhabitants - to file a homestead. Under the former law, such homesteads were filed with the Town Clerk for the town in which the mobile home was located. The new law changed that. Now, such homesteads are to be recorded at the registry of deeds.

One problem with this new practice involves the "deed reference" that should appear on the homestead. The owner of the mobile home typically owns just the home and not the land upon which it sits. In that case, there would be no deed into the mobile home owner. What to put on the homestead form? My recommendation is that the declarant of the homestead cite the book and page number of the deed into the owner of the property - presumably the person or entity to whom the mobile home owner pays rent.

As a practical matter, I don't believe that a homestead must contain any deed reference. I believe the practice prevails for at least two reasons: the homestead must adequately describe the property. Relying solely on the address can be troublesome as addresses vary over time. Therefore, it's better to have some parallel means of identifying the property. That could be the full property description that would typically be in the deed, or it could be an "incorporation by reference" inclusion of the book and page number of the deed.

Beyond describing the property adequately, including the deed book and page number tells us whether the property is registered land or recorded land. Placing the homestead on the proper "side" of the registry is critically important to the validity of the homestead. For that reason, we will require owners of "manufactured homes" to list the book and page number of the land owner's deed on the homestead.

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.

Questions about new homestead

Early in my law school career, a professor declared "law school is just a course in advanced reading." The same might be said about the new homestead law. Many questions have arisen. Upon reflection, most of them are answered by the statute if one reads it closely enough. But that takes some time and reflection. In the meantime, here's a sampling of the questions that have been posed so far today, the first day of the new statute:

When spouses come in together and one is over 62 and the other is not, should they execute a single form or file separately? What should they do when the younger spouse reaches age 62?

A spouse comes in alone, but the deed that establishes title to the property shows that it is owned by “husband and wife as tenants by the entirety,” should a homestead signed only by the spouse who is present be recorded or should it be rejected pending second spouse’s signature?

One spouse already has an elderly homestead on record. The other spouse has just reached age 62 and comes in to file a new homestead. May the younger spouse file alone or do both have to file the new form

Are there any additional requirements for Registered Land? Guidance from the Land Court is expected imminently although we do understand that a Registered Land Declaration of Homestead that’s placed on a Nominee Trust must be accompanied by the Trustee’s Certificate.

If co-owners are declaring a homestead using a single form that both have signed but only one of their signatures is acknowledged, may the homestead be recorded? Section 5(a) says “each owner to be benefited by the homestead” must “sign and acknowledge” but a deed or mortgage by co-owners that’s signed by both that has only one signature acknowledged is recordable.

New Homestead Law takes effect tomorrow

The long-awaited major revision to Massachusetts General Law chapter 188 (Declaration of Homestead) takes effect tomorrow. We've posted the full version of the new law on our website. In seeking to clarify many of the ambiguities of the old law, the new statute is quite extensive and takes several readings to begin to fully digest. The Secretary of State has posted a Question and Answer pamphlet on his website and I plan to post a concise fact sheet on the new law to the lowelldeeds site in the coming days.

In the meantime, new forms (there are two: one for property owned by individuals and another for property owned by a trust) are available on the Secretary of State's website in PDF version that can be completed on your computer and then printed. Here at the Middlesex North Registry of Deeds, most of our Homestead customers just walk in and complete the form here, so we have slimmed down versions of the regular homestead and the trust homestead here at the registry and on our website.

New Homestead Law begins this Wednesday

A story in today's Globe reminds us that the new Declaration of Homestead Law enacted by the state legislature last fall takes effect this coming Wednesday, March 16, 2011. The full text of the new law is available HERE and I've previously written about it HERE and HERE.

We'll be posting additional information about the new Homestead and a revised Homestead form on the lowelldeeds website by Wednesday, so please check back for the latest news on this topic.

Preparing for the new Homestead Law

The new Homestead law goes into effect next month - March 16, I believe. An agent for Old Republic National Title Insurance showed me a bulletin the title insurer prepared regarding the new law. Hoping Old Republic will forgive me for appropriating its work, here's the content of the bulletin:

In 1980, the Supreme Judicial Court issued its opinion in Atlantic Savings Bank v. Metropolitan Bank and Trust Co., 9 Mass.App.Ct.286, 400 N.E.2d 1290, (1980), which for conveyancers, was a seminal case in the law of Homesteads in Massachusetts. The Atlantic Court held that a mortgage executed by a homeowner and his spouse was superior to a prior-recorded Declaration of Homestead. Atlantic Savings Bank at 1291. Unfortunately, the case left many other questions unanswered and those issues have been the basis of a great deal of debate and uncertainty in the intervening period. With the passage of the new Homestead Law (2010 Mass. Acts Chapter 395), the legislature has rewritten M.G.L. c. 188 and answered those questions giving conveyancers a clear protocol that had been lacking until now. Effective March 16, 2011, the statute not only codifies the holding in Atlantic Savings Bank, it expands the scope of homesteads generally and does away with some of the prior law’s more anachronistic provisions.

What follows is a brief overview of some of the new provisions of chapter 188 with a view toward alerting our agents to those provisions of the statute which most impact conveyancing practice. Section numbers are references to the new sections. As always, agents are encouraged to review the statute and contact the Underwriting Department with any questions or concerns.

Automatic Subordination of Prior Homestead (Section 9): As mentioned above, the new statute codifies the holding in Atlantic Savings Bank. Specifically, section 9 provides that a when a mortgage is signed by all the owners of the property, a prior-recorded Declaration of Homestead will automatically be subordinate to that mortgage. However, the statute changes prior practice in that it no longer requires a non-titled spouse to sign the mortgage in order to subordinate the homestead to the new mortgage. Further, the mortgage no longer needs to contain subordination language which was a prerequisite to subordination for the SJC in Atlantic Savings Bank. Finally, section 9 prohibits a lender from requiring a release of Homestead prior to recording a mortgage.

Automatic Homestead (Section 4): The statute now provides for an automatic homestead without any action required of the owner. The automatic homestead under section four provides for $125,000.00 protection for the owner and her family. It should be noted, however, that while this is an improvement upon the old statute where no coverage was provided on an automatic basis, the protection provided is still significantly less than the $500,000 protection provided under the declared homestead option under section five.

Declared Homestead (Section 5): The new statute provides $500,000.00 protection on the recording of a written Declaration of Homestead. Section 5 provides several requirements for the form of declaration to be recorded, notable among these:

1. Non-title spouse must be identified (§ 5(a)(1)). This is a codification of prior practice and the dictates of Atlantic Savings Bank.

2. The homestead declaration cannot be made in a deed (§ 5(c)).

3. Homesteads may now be declared where the home is owned by a trust, and it is anticipated that the trustees would execute the declaration (§ 5(a)(1)). Further, the beneficiaries of the trust should be identified in the declaration (§ 5(a)(1)) and § 1).

4. If the homestead is declared while the owner is single, and the owner is subsequently married, the homestead shall accrue to the benefit of the new spouse, and that benefit shall accrue as of the date of the original filing (§ 5(d)).

Termination (Section 10): Agents will recall many situations where certain inter-family transfers resulted in a homestead’s inadvertent termination creating in some cases an undue hardship in contravention of the purposes of the statute. The new statute provides very clear parameters for termination and, as importantly, to prevent inadvertent termination. Under this section, termination must be evidenced by an intent to terminate and be in very specific form:

1. Deed to a non-family member signed by the owner and the non-titled spouse;

2. Release signed by owner and non-owner spouse;

3. By abandonment of the home by the owner, owner’s spouse and family;

4. In the case of trusts, a deed or release signed by the trustee or by the release or abandonment by the beneficiary named in the declaration;

Significantly, section 10 provides a safety net for those transactions which are not meant to affect a termination. Consequently, the following conveyances will not affect the homestead:

1. Deeds between spouses or co-owners who individually or jointly hold a homestead;

2. Deeds between a trustee and beneficiary;

3. Deeds between a life tenant and a remainderman, unless in all of the above cases, there is an express release in the deed.

Further, section 10(d) provides that nothing contained in a mortgage will act to terminate a homestead.

Multiple Owners: In a departure from prior practice, the new statute anticipates that a homestead may be declared by multiple owners (§ 5(a) and § 3(a)). That is, each co-tenant, joint owner or tenant by the entirety may declare their own homestead.

Notice (Section 14): The statute requires that the closing attorney provide the mortgagor with a notice of the right to declare a homestead under c. 188. The notice should be signed by the mortgagor to acknowledge receipt and should include inter alia:

1. a summary of the differences between the automatic homestead protections and the declared homestead protections;

2. the enhanced benefits of the declared homestead protections.

Old Homesteads remain in effect under the new c. 188: Finally, the new statute provides that all homesteads currently in effect will remain in full force notwithstanding their failure to comply with provisions of the new statute.

Governor signs new homestead law

Governor Patrick signed into law a major revision of the Commonwealth's Homestead Law today. Passed by the legislature just two weeks ago, the new law clarifies many ambiguities about the existing statute and adds several new consumer friendly provisions. I've written about the new bill here and here. It will take effect 90 days from today.

More on the new Homestead Law

Last month I wrote about the major changes to Massachusetts homestead law that were contained in Senate Bill 2406, then working its way through the legislature. Both houses of the legislature passed a final version of the bill and it now sits on the Governor's desk. My understanding he has until this Thursday to sign it. Once signed, the new law will take effect in 90 days.

Besides clarifying several long-standing ambiguities in the law which I wrote about last month, the new law contains a number of new, very consumer-friendly sections. In addition to creating an automatic homestead exemption for all homeowners in the amount of $125,000, the new bill also protects the proceeds of the sale of a home that was covered by a homestead. Here's what the bill says:

Section 8. (a) If a home that is subject to an estate of homestead is sold, whether voluntarily or involuntarily, taken or damaged by fire or other casualty, then the proceeds received on account of any such sale, taking or damage shall be entitled to the protection of this chapter during the following periods:

(1) in the event of a sale, whether voluntary or involuntary, or a taking, for a period ending on the date on which the person benefited by the homestead either acquires another home the person intends to occupy as a principal residence or 1 year after the date on which the sale or taking occurred, whichever first occurs; and

(2) in the event of a fire or other casualty, for a period ending on: ( i ) the date upon which the reconstruction or repair to the home is completed or the date on which the person benefited by the homestead acquires another home the person intends to occupy as a principal residence; or (ii) 2 years after the date of the fire or other casualty, whichever first occurs.

Increased liability for snow and ice?

The Supreme Judicial Court yesterday announced a new rule of liability for property owners when it comes to snow and ice. In Papadopoulos v Target Corporation, the plaintiff slipped and fell on ice in the parking lot outside the defendant's store at the Liberty Tree Mall in Danvers. The trial judge granted summary judgment in favor of the defendants, ruling as a matter of law that the offending ice was a "natural" accumulation for which the defendant was not responsible. In the decision announced yesterday, the SJC abolished the "natural versus unnatural accumulation of snow and ice" distinction that had been the law in the Commonwealth for more than a century in favor of a duty of reasonable care under the circumstances. (Although I haven't been involved in any private legal matters for 15 years, I am relieved that the old rule was jettisoned - I've never been able to understand the natural v unnatural distinction).

It will take another wave of lawsuits to clarify this new rule, but in the meantime, I expect litigation regarding snow and ice to increase. Just one more reason why homeowners should get down here to the registry and get a homestead recorded.

Bankruptcy Court decision on homesteads

Massachusetts Lawyers Weekly reports that a “Bankruptcy Appellate Panel” recently upheld a ruling by the US Bankruptcy Court for Massachusetts in a case interpreting Massachusetts Homestead law. The facts were that the debtor had recently been divorced with the non-debtor spouse having been awarded possession of the marital home and the debtor spouse receiving the right to 25% of the proceeds when the marital home was sold some time in the future. The debtor spouse had a homestead on the property and argued that his interest in the property should be excluded from the bankruptcy because of the homestead. The Bankruptcy Court held that the decision of the Probate Court in the divorce proceedings divested the debtor spouse of any interest in the real estate, leaving him only with a portion of the proceeds from a future sale which the Bankruptcy Court characterized as personal property that was not protected by the Homestead exemption.