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Massachusetts Real Estate Law

Massachusetts Homestead Protection Act

by Bill Gassett on March 26, 2010 · 73 comments

Massachusetts Homestead Protection Act

The Massachusetts Homestead Protection Act is one of the biggest no- brainers for any homeowner in Massachusetts to take advantage off.

Quite simply, an estate of homestead is protection for a persons residence from most creditors. The declaration of homestead protects the equity in your home for up to $500,000 in the event you are sued. In other words, if you are sued, $500,000 of your equity could not be touched by an attachment and subsequent levy on execution of sale. Unfortunately today we live in a litigious sue happy society. The chances of getting into an accident and someone suing you can not be overlooked!

The Homestead form is filed at the registry in the county that your home is located in.  All that is required is the preparation and recording of a Declaration of Homestead and the payment of a state recording fee. The total cost is typically around $100 to prepare and record the instrument. You could ask your attorney to prepare this document for you or possibly even the lenders attorney if you don’t have legal representation with your home purchase.

If you are married it only needs to be filed by one person and the other spouse is protected as well. You will typically see this document filed at the registry with all the rest of the closing papers on the purchase of a home.

There are some things that the homestead declaration does not protect against.

The following are exempt from the Homestead Law:

  • 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;
  • An execution issued from the Probate Court to enforce its judgment that a spouse pay for the support of a spouse or minor children;
  • Where buildings on land not owned by those declaring of a Homestead estate are attached, levied upon or sold for the ground rent of the lot whereon they stand;
  • Upon an execution issued from a court of competent jurisdiction to enforce its judgment based upon fraud, mistake, duress, undue influence or lack of capacity;
  • Debts contracted prior to the acquisition of the homestead.

The protection only extends to one primary residence. You can not have homestead protection on multiple properties.

Changes to Homestead Protection Act

There are some changes that have been proposed that would change how the mechanics of how the Massachusetts Homestead Protection works.

The new bill was filed on January 2nd 2010 and is known as House Bill No.1584. Below is a summary of the changes:

Automatic Homestead. The bill as proposed would automatically provide protection up to $125,000 of home equity for all homeowners, regardless of whether the homeowners have filed a declaration or not. Homeowners who record a homestead declaration would still receive protection of their equity up to $500,000.

Signature. A flaw in the homestead protection statute is that only one of the owners may file a homestead in any home. Under the current statute, joint owners, including spouses, currently have to decide which of them is more likely to have liability for a claim that is not covered by insurance or who is more likely to get sued. The proposed Bill would allow both spouses to file, even if only one spouse is named on the title.

Second Homestead. Under the new Bill, a second homestead filing would relate back to the date of the first filing. This would protect against liability incurred between the two filings that could compromise the second declaring parties equity.

Trust. Completely changing the current statute, the Bill would provide protection to beneficiaries of trusts that hold title to the residence, provided that the home is, in reality, the beneficiaries’ principal residence.

Transfer of Title Between Spouses and Co-owners. Currently, spouses or co-owners who transfer title between themselves without explicitly retaining homestead rights inadvertently terminate their right to protection. Under the new homestead protection act, transfers among family members will not terminate a previously declared homestead  even if the homestead is not reserved in the deed.

Home Sale Proceeds. Under the current homestead protection law there is no protection for homeowners who sell their home and do not immediately reinvest the proceeds in a new principal residence. With the new revision proceeds from the sale of a home would be protected for up to a year and two years for casualty/insurance proceeds.

Mortgage. Lastly, the Bill would prohibit mortgage lenders from requiring homeowners to terminate their homestead rights in order to secure a mortgage.

Whether these new modifications take place or not, having Massachusetts Homestead protection is one of the wisest investments any home owner can make!

UPDATE ~ As of December 2010 the Massachusetts Homestead amendment has passed. The highlights of the bill as described above are the automatic homestead protection up to $125,000 without having to file a homestead document at the local registry, homestead remaining valid if the home is transferred to another family member, homestead remaining in force under a refinance, as well as providing additional protection for home owners who receive insurance proceeds from fire or other damages.

The homestead protection act also now provides coverage for those who have put their home in a trust. Lastly, closing attorneys in mortgage transactions must now provide borrowers with a notice of availability of a homestead.

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About the author: The above Real Estate information on the Massachusetts Homestead Protection Act was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Franklin, Framingham, Grafton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, and Douglas.

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In Real Estate When in Doubt Disclose!

by Bill Gassett on February 20, 2010 · 24 comments

Non disclosure of water in basementIn Real Estate when in doubt it is always better to disclose, disclose, disclose! There is no point in hiding things in Real Estate as it is very easy to end up in a nasty law suit. Laws vary by state on what needs to be disclosed but as a general rule any material fact that could effect the value of a property should be disclosed to a buyer. Buyers and sellers need to understand it is the Real Estate agents job present everything that they discover about a property.

As an example, if a Realtor happens to see water coming into the basement of a home they are marketing, they sure as heck better be letting any future buyers know about the existence of this problem.

If a Realtor is asked a direct question about a particular property, they must give an accurate and truthful answer to the best of their knowledge. Additionally, a Realtor cannot try to avoid discovering the details of a suspected problem. Avoidance of an issue does not work as an excuse. Years ago when I got into the Real Estate business it used to be “let the buyer beware”. Now it is “let the seller and their Realtor beware”.

My position has always been if you have even the slightest question about whether or not to disclose something to potential buyers, avoid the potential for liability and tell all.

There will always be fine lines on things that need to be disclosed as a recent Massachusetts  lawsuit regarding second hand cigarette smoke suggests. Attorney Rich Vetstein of Framingham Massachusetts does a great job covering this story over at his Real Estate law blog. You can read about it at Lawsuit over second smoke against Realtor raises a stink. Essentially the case is about a women who suffers from asthma claiming that her agent failed to disclose that a heavy smoker lived downstairs. When visiting the unit, before her purchase, she was assured by the Realtor that the cigarette smell would go away once she painted and fixed up the place.

The case boiled down to the agents duty to disclose both defects not only within the property but off-site as well. According to Rich Vetstein, “The Massachusetts Supreme Judicial Court has held that off-site physical conditions may require disclosure if the conditions are unknown and not readily observable by the buyer and if the existence of those conditions is of sufficient materiality to affect the habitability, use, or enjoyment of the property and, therefore, render the property substantially less desirable or valuable to the objectively reasonable buyer.”

Disclosing neighborhood issues

Just reading that statement gives cause for concern. Is it any wonder why their are so many lawsuits in Real Estate? Where do you draw the line when it comes to issues of those living around you? Every persons interpretation of what is considered a nuisance is different.

Fortunately for this Realtor and more than likely for other Realtors in future cases, the jury decided that it was not reasonable for the agent to be responsible for the knowledge of a smoker in another unit.

The take home message here that might be missed, given that the Realtor won the case, is never to make statements for which you are not 100% sure of. Realtors should always be wise about what comes out of their mouth. As someone who has been selling Real Estate in the Metrowest Massachusetts area for the last twenty four years can attest, why make statements you can’t possible know unless you are clairvoyant.

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Massachusetts Oil Heating and Insurance Law Changes

by Bill Gassett on February 12, 2010 · 10 comments

Massachusetts Home Insurance Law

As of September 30, 2011 any home that is serviced by an oil fired heating system in Massachusetts must comply with a new law that requires home owners to upgrade their system equipment to prevent leaks.

The new legislation is designed to prevent leaks from pipes and equipment that connect to your furnace. The law was originally set to become effective on July 1, 2010 but was extended.

The new law is addressed in Chapter 453 of the Acts of 2008. The two biggest provisions of the law change include the following:

  • The installation of either an oil safety valve or an oil supply line with a protective sleeve on systems that do not already have these devices in place.
  • Insurance companies that provide home owners insurance policies must offer coverage for oil tank leaks from heating systems that use oil.

What is important to note is that most home owners policies do not currently include coverage for oil leaks leaving home owners to fend for themselves with costly clean up bills. The new law makes it mandatory for insurance companies to offer coverage, however it is up to the individual home owner to purchase this optional insurance. Implementation of the insurance coverage will also start as of September 30, 2010.


 

Who must take action?

Homeowners of one to four unit dwellings that are heated with oil must already have or install an oil safety value or an oil supply line with a protective sleeve. Installation of these parts must be completed by a licensed oil burner technician.

If your home was built after January 1 1990, you are more than likely already in compliance with the new law because state fire codes were changed to require these parts on new installations at that time.

Who is exempt?

 

Homeowners are not required to comply with these leak prevention steps if the oil burner is

  • Located above the oil storage tank and the entire oil line is connected to and above the top of the tank.
  • An oil safety valve or oil supply line with protective sleeve was installed on or after January 1, 1990 and
  • The changes are in compliance with the oil burning equipment regulations. The copy of the oil burner permit from the local fire department may be used to demonstrate you are in compliance.

Complying with this new law is a no brainer! The cost of cleaning up an oil spill is very expensive. The cost of making this upgrade is very cheap. We are talking about a few hundred dollars to make these upgrades. Why take a chance and be left with a bill that could cripple you financially!

If you are unfortunate enough to have a leak and it reaches the soil beneath your home then a clean up is going to be necessary to bring your property back into compliance with state environmental standards. If the leak is severe enough and it impacts your neighbors or the local ground water supply the bill is going to be astronomical.

In Massachusetts, reports indicate that there are a few hundred spills a year. If you have a spill the cost for clean up on the low end is going to be $15000 to $20,000 dollars. A high end clean up can easily get into the hundreds of thousands! Who would ever want to deal with this kind of nightmare when it is so easy to avoid? I know if I owned a home that was built prior that 1990 I would not want to even think about such a catastrophe. I would make darn sure I was compliant right away!

What Kind of Insurance is available to home owners?

In order to be eligible for coverage you must make sure that your home is either compliant or exempt from the new law.

The insurance will provide “1st party coverage” of at least $50,000 to cover the expenses of cleaning up a leak to soils, indoor air, or other environmental media from a home heating system at the residence itself and also reimbursement for personal property damage.

Secondly you must provide for “third party coverage” of at least $200,000 for dealing with any problems that occurred as a direct result of the leak for damage off of the property. This could be a near by home or the local ground water. The insurance coverage will also include costs for legal fees subject to a deductible not to exceed $1000 per claim.

*** The key point to remember with the Massachusetts Oil Heating and Insurance law is that an upgrade is more than likely be necessary only if your home was built prior to 1990.

A special thanks goes out to Rory Warren of Warren Home Inspections who made me aware that this new law would be going into effect. Rory mentioned there is some talk about asking home inspectors to police homeowners who are not compliant with the law at the time of a home inspection. What is more likely is that the oil company that services and delivers oil to the home will be responsible for making sure the home owner is compliant.

If you are thinking of selling your home in Massachusetts one other law that is going into effect in Massachusetts concerning home safety is the Massachusetts Smoke Detector Law. You can read the complete article on the law by clicking the link. The basics of the new regulations is that as of April 5, 2010 you will be required when selling a home to have certain kinds of smoke detectors.

Other Real Estate articles worth reading:

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About the author: The above Real Estate information on the Massachusetts oil heating and insurance law changes was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Franklin, Framingham, Grafton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, and Douglas.

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