Think Your Homestead Gives You Absolute Protection…Well, Think Again

Neal B. Glick Buying/Selling Your Home, Neal Glick, Real Estate Law

A homestead declaration is a valuable tool, and we recommend it. It is simple and inexpensive and gives qualified homeowners a valuable shield against creditors’ demands. But there are limits to the protection that shield offers, as described in the recent decision of the Appeals Court in Hartog, Baer & Hand, A.P.C. v. Clarke, 99 Mass. App. Ct. 460 (2021).

The plaintiff California law firm (“HBH”) had a California judgment against Clarke. Clarke’s home in Chatham has a homestead exemption of $500,000 against creditors pursuant to the Massachusetts Homestead Act (first enacted in 1851 and substantially revised in 2010). HBH brought an enforcement action in Massachusetts and was granted a judgment and an execution. HBH then recorded a levy on the execution at the Barnstable Registry. HBH requested the Sheriff to suspend further action. Clarke sought to dissolve the recorded levy while his property was protected by the homestead exemption.

Clarke argued that his recorded declaration of homestead precluded HBH from placing a lien (the recorded levy) on his home. As a practical matter, allowing the lien eliminated his ability to refinance and required HBH’s cooperation in any sale or other encumbrance of his property.

Clarke lost at the trial court level and that decision was upheld by the Appeals Court. The purpose of the Homestead Act is to protect homeowners and their families from creditors’ demands so that they can remain in their homes notwithstanding outstanding debts. It is not, as Clarke asserted, to allow him to sell or refinance without increased cost or inconvenience. Since HBH suspended its levy, Clarke’s ability to reside in his home was protected from HBH’s demand. In effect, HBH can let the levy sit and bide its time, waiting for the day when “the equity in the home exceeds $500,000 or the homestead estate is removed or lapses.”

A homestead declaration allows owners and their families to stay in their homes, not to be free of clouds on their title.