Bay State Homeowners Sans Filed Homestead Declaration Now Entitled To Automatic $125K Home Equity 'Shield' Against Forced Sale By Judgment Creditors

In Boston, Massachusetts, The Patriot Ledger reports:

• Massachusetts homeowners stand to receive new protections from creditors under a bill that was recently enacted by the state legislature. The bill would automatically protect the first $125,000 of equity on a primary residence from creditors.

• Currently, only homeowners who file a “declaration of homestead” form with the Registry of Deeds enjoy such protections. A spokesman for the Patrick administration said Gov. Deval Patrick signed the bill into law on Thursday night. “This is really going to protect people who find themselves with their backs to the wall,” said Susan Grossberg, a Boston bankruptcy attorney.

• The protections would apply both to new transactions and existing homes. Homeowners still would have the option of filing a declaration of homestead, which increases the exemption to $500,000. The legislation is designed to deter creditors from foreclosing on the homes of delinquent debtors, even if they have filed for bankruptcy.

• Under the current law, if a homeowner does not have a declaration of homestead, a creditor could place a lien on the home and begin foreclosure proceedings. “They could turn around the next day and give you a notice that they’re going to foreclose to satisfy their lien by selling this house,” Grossberg said.

• Massachusetts is one of a dwindling number of states without an automatic homestead provision, said Kathleen Joyce, director of government relations for the Boston Bar Association. The group lobbied for the expanded protection for several years without success. To file a declaration of homestead, homeowners fill out a signed, notarized one-page document declaring a property as their primary residence and pay a $35 fee to file it with their local Registry of Deeds. These are typically filed at the time of a home’s purchase, but can be done at a later date as well.

Source: New law would protect homeowners’ equity (Designed to deter creditors’ foreclosures). homestead exemption