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Declaration of Homestead
Why An Attorney Should Represent You When you Buy/Sell a Home

Declaration of Homestead

For most of us, a home is the biggest investment we will ever make, and the largest asset we will ever own.   To help protect your home in case you are ever sued, the Massachusetts State Legislature has established a procedure allowing any homeowner to file what is called a Declaration of Homestead, not to be confused with the Declaration of Independence!   If you own a home, you should strongly consider filing a Declaration of Homestead in the county in which you reside.   The Homestead Protection is allowed for anyone who resides in a single family home, multi-family home, condo and mobile home.

A Declaration of Homestead is recorded to protect an owner's residence against the claims of creditors such as medical doctors and credit card companies, etc.  A Declaration of Homestead can also protect your home from execution, attachment and forced sale, so long as you occupy or intend to occupy your home as your principal place of residence.

In recent years, the Massachusetts State Legislature, in its infinite wisdom and generosity, has amended the Homestead Laws, M.G.L. c. 188, substantially increasing its protection to homeowners.   A Declaration of Homestead is now available to single, as well as married owners, with or without children, so long as the home continues to be the principal place of residence of the owner.

The Declaration of Homestead was increased from $300,000.00 to $500,000.00 worth of the equity in the home, protecting you from future creditors, attachment, levy of execution, and sale not exempt from prior existing debts and debts owed for state, federal, and real estate taxes, or court orders for child support and alimony.

The Homestead Protection is also available if the owner of a home is at least sixty two (62) years of age, or is permanently and totally disabled, regardless of his/her age.  In this case, the husband and wife homeowner may each file separately for a Homestead   Protection up to $500,000.00 each, for a total of $1 million in protection for the both of them.   Regardless of your age and physical/mental health, the Declaration of Homestead is a powerful tool.

Most people frequently confuse the Declaration of Homestead with Home Owners Insurance.  The Declaration of Homestead does not replace the necessity for Home Owners Insurance.  Therefore, your home should remain insured at all times.

The Declaration of Homestead,  or Homestead Protection is a great defense against those nagging and harassing creditors who just can't seem to go away.   In this litigious society, don't you deserve to be protected?

Why An Attorney Should Represent You When you Buy/Sell a Home

The purchase of a home is often the single greatest financial investment made by a person or couple. You should hire an attorney before you sign the Offer to Purchase because it is a binding contract between the Buyer and Seller and defines the rights and duties of the parties.

The Offer to Purchase is where you include items such as the price agreed upon, the parties, items included within the sale of the home, items excluded from the sale of the home, dates for inspections, and dates needed to apply for a mortgage and to get a mortgage commitment.

Once a Seller and Buyer sign the Offer to Purchase, they are bound by those conditions stated within that Offer. Therefore, this is a document that is binding and must be taken seriously. Those rights and duties may be further defined in the Purchase and Sale Agreement.

The best time to consult with an attorney is before you put your house up for sale, and/or before you decide you are going to buy a house.

A lot of Buyer's believe that they do not need to hire an attorney because the Bank Attorney will represent them. The truth of the matter is that the Bank Attorney does not get involved until the end of the transaction, and they have no interest in representing the Buyer. The Bank Attorney's only role is to represent and protect the bank.
 

The following are some of the items that must be carefully negotiated in a Purchase and Sale Agreement. Typically they are as follows:

  • Buyer's loss of deposit if they cannot obtain a mortgage.
  • Seller's guarantee to pay the broker's commission even though the Buyer defaults and there is no sale.
  • Buyer's obligation to purchase the house if it is destroyed.
  • Seller's obligation to vacate the house prior to closing.
  • Seller's obligation to leave the house in "broom clean" condition.
  • Seller's right to sue Buyer for damages if Buyer defaults.
  • Buyer's right to have various inspections done at the premises, including a home inspection, pest inspection, lead paint, water, U.F.F.I., radon, and Title 5 Inspection.
  • Buyer's rights if there are issues, which turn up with the inspections.
The only way you can be fully protected is to have an attorney examine the Purchase and Sale Agreement before signing it. It is extremely difficult, sometimes impossible, for an attorney to protect his/her client when the client has already bargained away his/her protections in a poorly drawn or disadvantageous agreement.

The following are the roles of the Attorney for the Seller:

  • Confer with the client.
  • Review or prepare the Purchase and Sale Agreement and negotiate its terms, including who should hold the deposit.
  • Prepare the Deed and Power of Attorney if necessary.
  • Deal with title issues raised by the Bank Attorney.
  • Attend the closing and review papers, which the seller is required to sign.
  • Set up escrows and special arrangements to correct title, complete construction, or assure possession.
  • Obtain account numbers/phone numbers for existing lien holders.
  • In a condominium transaction: to arrange for a 6D Certificate, Insurance Certificates, Release of Right of Refusal (if any).
  • In a multi-family investment property: to deal with the transfer of security deposits and the various notices to tenants.

The following are the role of the Attorney for the Buyer:

  • Confer with the client, including issues such as how to take title, information on the type of property to be purchased (Example: single family, multi-family, condominium), and financing issues.
  • Review the Offer to Purchase.
  • Review the Purchase and Sale Agreement to negotiate its terms, including who should hold the deposit.
  • Review the various inspection results.
  • Review the title examination with the Bank Attorney.
  • Attend the closing and review papers, which Buyer's are required to sign.
  • Set up escrows and special arrangements to correct title, complete construction or assure possession.
  • Arrange Owner's Title Insurance Protection for Buyer against losses due to title defects, if desired.
  • Prepare a Declaration of Homestead, if desired.
  • Transfer of security deposits and notice to tenants.
The closing must follow the exact provisions of the Purchase and Sale Agreement, which is why the attorney's prior involvement is so important. The attorneys compute the adjustments for taxes, fuel etc., and prepare a closing statement showing the amount owed by the Buyer to Seller.

An attorney will highly recommend that their Buyer's purchase an Owners Title Insurance Policy, which will protect their equity interest against any claims that might arise during the period of home ownership.

The Purchase and Sale of a house is often the single largest financial transaction in a lifetime. It is important that the Attorney of your choice represents you before beginning the buying and selling process.
 
This article was submitted by Attorney Teresa Persico in the December 2002 issue of The Bellingham Bulletin and Blackstone Enlightener and The Town Crier.
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