A recent U.S. District Court decision upheld the principal that the Massachusetts Homestead Act permits property owners to declare a homestead on a mixed-use structure that is used predominantly for residential purposes. The Massachusetts Homestead Act allows a property owner to declare a homestead on a building to protect the property from creditors. Under the Homestead Act, a “home” is defined as a single-family or multi-family dwelling, a manufactured house, or a unit in a condo or co-op building.
The case before the U.S. District Court involved a two-story building located in a residential zone that permitted home businesses. The property owner used the second floor of the building as his personal residence while operating his insurance business out of the first floor. The Court concluded that a property is not precluded from consideration as a single family dwelling under the Homestead Protection Act merely because it is not exclusively used as a residence. The Court held that as long as the predominant purpose of the property is residential in nature, the Homestead Act will apply. In its decision, the Court failed to provide any additional guidance as to what facts would be considered when determining the predominant purpose of a building. It appears that the Court, in its decision, intended to protect mainstream, customary home occupations from future homestead exemption cases.
If your home is not protected under the Massachusetts Homestead Act, it is important to contact a knowledgeable real estate attorney to ensure your residence is protected from creditors.
-Sean Hurley