Updated Homestead Protection

Homestead protection shields a primary residence by requiring certain creditors to wait for the payment of their debts, after taxes and mortgages are satisfied, and after receipt of the equity in a home up to the homestead exemption amount. Note that the new legislation does not impact the automatic homestead exemption; and if one does not record a homestead declaration, the protection is up to $125,000.

On August 6, 2024, the Legislature increased the declared exemption limit for primary residences protected from $500,000 to $1,000,000 for those who had filed a declaration of homestead. Homeowners who previously filed a homestead declaration do not need to re-file to take advantage of the increased protection amount and they automatically benefit from the $1,000,000 protection.

The new law also increased the homestead protection for elderly or disabled persons, from $500,000 per person in a primary residence, to $1,000,000 per person. Individuals who are disabled or aged 62 or older, regardless of marital status, can file a separate declaration to obtain this personal homestead protection. Multiple exemptions can be combined to protect a single primary residence over the ordinary homestead limit of $1,000,000.

All owners living at the residence are eligible to the Section 3 Declaration protection up to the $1,000,000 limit. In the case of multiple owners, the $1,000,000 exemption is divided between them. A Section 3 Declaration continues to protect the declarant’s family members who reside in the same house even after the declarant dies. A homestead declaration protects the homeowner’s primary residence from certain creditor claims during bankruptcy except as follows that are not affected by homestead protection:

1) A sale for federal, state and local taxes, assessments, claims, and liens;
2) Prior liens, municipal taxes and a mortgage on the home;
3) An execution issued from the Probate Court to enforce its judgment that a spouse pay for the support of a spouse, former spouse or minor children; and
4) An execution issued from a court of competent jurisdiction to enforce its judgment based upon fraud, duress, undue influence or lack of capacity.

Senior Homestead Protection for Persons 62 or Older 

The Homestead Act allows people 62 years or older to individually declare a $1,000,000 exemption per person in their primary residence under Section 2. If the home is co-owned by two seniors, then they each can declare the $1,000,000 exemption; and do not need to share that amount. The Act also addresses the same homestead protection for disabled persons.

A senior homestead declaration can be terminated by death of the declarant, leaving any heirs who lives in the home with no protection. If the spouse inherits the home, and lives there, then a Senior Section 2 Declaration will be converted into a Section 3 Declaration for the benefit of the spouse. The spouse can declare under Section 2 if over 62. If owned by tenants in common, and over 62, but the other is not, the over 62 can file a Section 2 Declaration and the other can file a Section 3 Declaration and have a total of $1,500,000 homestead protection.

Jointly owned property by a married couple if over 62 years old can protect the residence for up to $2,000,000 as a family by each filing a Section 2 Declaration. But each individually is entitled to only $1,000,000 of protection.

If a home is owned by a Trust, only the Trustee can sign the declaration of homestead on behalf of the beneficiaries. The rules regarding homestead exemptions are technical and the filing requirements must be complied with, failing which the full homestead exemption to which someone is entitled, may not be realized.