What are my homestead rights in New Hampshire and Massachusetts?

Apr 20

In many states there are certain homestead rights that grant you additional benefits or rights over your primary residence (as opposed to a rental property or secondary home).

However, these homestead rights can vary by state drastically.

Massachusetts Homestead

With Massachusetts homestead rights, you generally have a $125,000 automatic protection on the equity in your home. In other words, if your house is worth $625,000, but you have a $500,000 mortgage on it, then your equity in the home is currently $125,000 and is fully protected. As you paydown your loan (and as your house appreciates in value) your equity above that threshold would not be protected (if you only relied upon the automatic homestead in Massachusetts).

Massachusetts then allows you to go one step further by filling a declaration of homestead with the registry of deeds in order to increase that exemption (a/k/a protection) amount to $500,000 - or up to $1 million if you and your spouse are age 62 or older (elderly and/or disabled persons get $500k each up to that $1 million limit). If you aren’t elderly or disabled, then this 500k exemption applies to the family household so it doesn’t change depending on if you are single, married, or have minors also living in the home.

For clients in the greater Boston area, this may not offer complete protection on your home (if you aren’t elderly / disabled) since many houses are now valued closer to $1 million. But, once again, if you have a mortgage on the property then the equity may be temporarily within the full exemption amount from non-exempt creditors.

New Hampshire Homestead - RSA 480

New Hampshire homestead rights are similar to Massachusetts in that it has an automatic exemption. But there are four important differences relative to Massachusetts:

The exemption is $120,000 (slightly less) than Massachusetts
A married couple gets up to $240,000 (this applies even if only one spouse is on the title)
There isn’t a declaration of homestead available to increase the amount any higher (so you’re stuck with a relatively low exemption).
Creditors can force the sale of the property.

The last one is a biggie because even though the creditor may have to pay you the homestead amount, they can get a judgment to force the sale unlike in Massachusetts where that isn’t allowed (unless an exception applies like failure to pay property taxes).

And, even though New Hampshire properties have traditionally been a fraction of the price of a Massachusetts home, the gap in protection has become more apparent as southern New Hampshire property values have ballooned over the last few years while the exemption remains stuck at 120k / 240k (it doesn’t adjust for inflation).

Are there exceptions to the homestead rule?

While the homestead generally can protect some equity in your home up to the limits already discussed, there are some scenarios where you would not be protected, for example:

The collection of taxes;
The enforcement of liens of persons having done work for the construction, repair or improvement of the homestead;
In the enforcement of mortgages on the property;
In the enforcement of liens filed by homeowner or condominium associations for unpaid assessments.

So, it’s generally a good idea to keep paying your taxes, contractors, and mortgages (in case the thought crossed your mind). There are also rules surrounding Medicaid issues that are best answered by a qualified elder law attorney.

What if I transfer my property to a trust? Am I still protected?

Yes, Massachusetts and New Hampshire do have trust homestead protections, but you’ll need to speak with an estate planning attorney licensed in your state to make sure the trust and relevant real estate documents are completed correctly.

However, given the lower homestead exemption and the fact that creditors can force the sale of the property in New Hampshire, you may want to consider doing separate trusts as opposed to a joint trust if you live in New Hampshire to further protect your assets. This is especially important if you own a rental property or a business as you may be able to split or shield the title by having the primary residence in once spouse’s separate trust vs. having everything held in one trust bucket.