The Massachusetts Homestead Statute was first enacted in 1851, to exempt from the reach of creditors a limited amount of equity in one’s primary residence. Recently, the Homestead Statute has come under fire for being ambiguous and in need of reform to address the modern family and modern ownership structures.
Accordingly, on December 16, 2010, Governor Deval Patrick signed a comprehensive revision to the Massachusetts Homestead Statute proposed and advocated by the Real Estate Bar Association (hereinafter “REBA”), which law is to take effect on March 16, 2011.
Under the new legislation, every Massachusetts homeowner will automatically have $125,000.00 of creditor protection for the equity of their home, regardless of whether a Declaration of Homestead is filed. By filing a Declaration of Homestead, a homeowner may increase that protection to $500,000.00.
Further, under the new law, mortgages cannot terminate previously filed Homesteads. Rather, any mortgage provision which purports to terminate a Homestead is simply deemed to subordinate the mortgage to the Homestead. Additionally, proceeds from the sale of a home, or insurance proceeds recovered if your home is destroyed by casualty, are also now entitled to Homestead protection (for up to a year for sale proceeds, and two years for insurance proceeds). Moreover, under the previous version of the Homestead Statute, persons whom did not file under the provisions of the statute that protect the elderly or disabled learned that their manufactured homes did not qualify for Homestead protection. However, under the new law, manufactured homes are eligible for protection under all provisions of the statute. Further, under the previous version of the Statute, if you transferred your home to a trust for estate planning or other purposes, there was no Homestead protection. In response to this issue, the statute now provides that trust beneficiaries are entitled to Homestead protection. Additionally, under the prior statute, Homestead protection was lost when spouses holding property as tenants by the entirety transferred the property to one spouse individually and did not expressly reserve the Homestead in the deed. Thus, under the new act, transfers among family members will not terminate a previously declared homestead, even if the Homestead is not reserved in the deed.
While the Massachusetts Homestead law is an important consumer protection statute, it is not without limitation. To that end, the following are exempt from the Homestead Statute: federal, state and local taxes, assessments, claims and liens, mortgages used to purchase the residence, and in the case of the elderly Homestead, first and second mortgages held by financial institutions or others, executions issued by the Probate Court to enforce judgments for spousal or child support, where buildings on land now owned by the homeowner are attached, levied upon or sold for the ground rent of the lot of land whereon they stand, executions issued by courts of competent jurisdiction to enforce judgments based upon fraud, mistake, duress, undue influence or lack of capacity, and liens filed against the property prior to the date of filing of the Declaration of Homestead or liens existing prior to the date of acquiring the property (in the case of the automatic Homestead provision). Further, consumers should be aware that Homestead protection is not a substitute for homeowners insurance or any other type of liability insurance, and homeowners should continue to maintain appropriate insurance coverage for their home. If you would like further information regarding this article, please contact Jennifer Barnett at jbarnett@meeb.com or 781-843-5000 (157).
About MEEB
When Marcus, Errico, Emmer & Brooks opened its doors in 1993, condominiums were still a relatively new concept in New England and condominium law was just beginning to emerge as a legal specialty. But the founding partners, who all had small condominium practices of their own, recognized that condominiums were poised to experience the same explosive growth in this part of the country they had already experienced elsewhere. And they anticipated the need for law firms large enough and specialized enough to provide the full range of legal services condominium communities would need.
Their crystal ball was accurate. Nineteen years ago, the firm had 9 attorneys representing a few hundred community associations in Massachusetts; today, 30 attorneys – 10 partners and 20 associates —representing more than 4,000 communities in Massachusetts, Rhode Island, and New Hampshire and is a member of a referral consortium with wholly independent offices in Washington D.C., Virginia, California, Colorado, Georgia, Arizona and Hawaii, making us the second-largest condominium law firm in the country based on the number of association clients and the number of attorneys devoted to that practice.
Although condominium law represents the core of our practice, we have also developed considerable expertise in commercial real estate and land use and development (including time share and resort communities). Diversifying our practice in this way has broadened the services we can offer and increased our ability to attract attorneys with a wide range of interests and experience to the firm.
But it is for our representation of condominiums and our commitment to the community association industry that our firm is best known and on which our reputation rests today. Commitment — to the industry as well as to our clients —is a cornerstone of our philosophy and crucial to our practice. We recognize that our ability to serve our condominium clients requires active participation in and strong support of the industry that supports them. That principle has guided the firm’s development from the beginning. A shared belief in the growth potential of condominiums was only one of the bonds that brought the founding partners together; equally important was their work to secure passage of the Massachusetts Super Lien law that has done so much to ensure the financial viability of condominiums here – one of many legislative initiatives, nationally as well as regionally, in which members of the firm have had a hand.
Our attorneys interpret the “encouragement” to participate in industry affairs as a mandate. All of the name partners have served at least one term as president of CAI-New England, the regional affiliate of the Community Associations Institute; three are members of CAI’s College of Community Association Lawyers; other members of the firm serve regularly on CAINE committees, speak at association-sponsored seminars and educational programs, and otherwise volunteer their time and legal expertise to support CAI and the services it provides condominium managers, trustees and owners.
The condominium world has changed over the past 20 years, to say the least. Laws and regulations have multiplied, the challenges confronting condominium boards have become more complex, and our firm has evolved, necessarily, to keep pace with those changes. One thing that has not changed, however, is our belief that the appropriate measure of a law firm is not the number of names on its client list or the number of attorneys on its letterhead, but the energy and commitment those attorneys bring to the practice and the quality of the services they provide.
Business consultants who advise law firms typically emphasize the need to “manage” client expectations. We believe in setting that expectation bar high by returning phone calls as close to immediately as possible; by responding thoughtfully to the questions our clients pose and the problems they ask us to solve; and by making sure the firm’s growth in the future will expand its capacity to serve all of our clients, without weakening the commitment we make or the personal attention we provide to any of them.
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