REBA’s Comprehensive Overhaul
Governor Signs Homestead Reform Legislation
On December 16, 2010 Governor Patrick signed a comprehensive revision of the Massachusetts homestead law, proposed and advocated by the Real Estate Bar Association.
“This new law is the product of extensive research, drafting and legislative effort, a project that REBA launched over six years ago,” said REBA President Tom Moriarty. “Thanks go, first and foremost, to Mike Goldberg, co-chair of REBA’s Legislation Committee and a driving force behind the bill, as well as co-bill drafters, Lisa Delaney and Erica Bigelow. Experienced real estate lawyers, they volunteered countless hours to this project. They worked with our partners at the Massachusetts Bankers Association, the Boston Bar Association and the Massachusetts Bar Association to get this one right. It’s a great result.”
The Massachusetts homestead law is an important consumer protection statute that has been identified by numerous real estate practitioners as well as bankruptcy judges as antiquated and in need of serious reform. The previous law, M.G.L. c. 188, protected up to $500,000 of equity in a primary residence upon the recording of a declaration of homestead, but there were several provisions in the old law that had been confusing to lawyers and judges, and sometimes resulted in disadvantage to homeowners.
With the new law, every Massachusetts homeowner will automatically have $125,000 of creditor protection for the equity in their home, regardless of whether a homestead declaration is filed. By filing a declaration, the homeowner increases that protection to $500,000.
The new law also provides homeowners with additional protection for insurance and sale proceeds, enables trust beneficiaries to secure homestead protection, affords greater protection to non-owner spouses, and clarifies lien priority issues with home mortgages.
The new statute will take effect in 90 days.