Homestead laws allow homeowners to declare a limited portion of their property as a "homestead," thus sparing it from creditors in the event of a bankruptcy or other financial hardship. These laws originally were intended to protect families from losing their farms. Homestead laws now apply to homes and other residences, including condos and residential cooperatives. Massachusetts' homestead law calls for an automatic exemption that protects equity in a home up to $300,000.
Learn more about Massachusetts' homestead laws in the table and in-depth information that follows it. See FindLaw's Bankruptcy and Land Use Laws sections for related articles and resources.
| Code Section | Ch. 188 §1, 1A |
| Max. Property Value That May Be Designated 'Homestead' | $300,000 |
| Maximum Acreage (Urban) | - |
| Maximum Acreage (Rural) | - |
Purpose of Homestead Laws
One main purpose of homestead laws is to prevent homelessness in the event of bankruptcy. A person who goes through bankruptcy will always have fewer assets than they have liabilities. A bankruptcy proceeding will generally require a person to sell all of their assets in order to pay for their debts, which requires selling a house to pay for the debts. Because they have sold all of their other assets to pay for their debts, they may not have any money to fall back on to find housing after the bankruptcy.
How Massachusetts Homestead Applies
As previously mentioned, homestead laws generally apply during a bankruptcy proceeding. Massachusett's $300,000 homestead allotment protects that home equity from creditors. This means that if the equity invested in the home is less than $300,000, the person may not have to sell the home. If the equity in the home is greater than $300,000 the person may have to sell their home, because creditors are able to take any equity in a home over $300,000.
What Homestead Applies To
Homestead only applies to certain properties. The Massachusetts homestead law defines "home" as single family homes, 2-4 family homes, land attached to those residences, manufactured homes, home cooperatives, and a condo unit used for residential purposes. It is important to note that all of these definitions of a "home" require a residence. Property that is not used as a primary place of residence does not qualify under homestead laws. As well, homestead does not apply to commercial properties.
If you would like to know more about how homestead applies to your residence, and whether you can take advantage of the homestead laws in a bankruptcy or other forced sale, there are many attorneys with bankruptcy experience throughout Massachusetts who may be able to help. In addition to helping you with homestead questions, they may also be able to advise you on the benefits and drawbacks of a bankruptcy, and help you plan a bankruptcy if you so choose.
