Refinancing and homesteads

Massachusetts law allows a homeowner to file a Declaration of Homestead at the registry of deeds to protect the family home from a forced sale by a creditor.

Many who already have homesteads often ask if they must record a new one after refinancing. The answer is unclear.

Technically, a mortgage is a deed and in homestead law, a new deed voids an existing homestead. So logically, if a mortgage is a deed and a deed voids a homestead, then a mortgage voids a homestead.

But logic doesn’t always work with property law. Many in the legal community contend that a mortgage is just a security interest and not a deed, so it has no effect on an existing homestead.

Why not record a new homestead, just to be safe? A homestead protects against debts that come into existence after the homestead is recorded, so you might have an unknown debt lurking about that would be covered by the old homestead but that would predate and fall outside the protection of the new one.

Since every case is different, the best thing to do is to ask the lawyer who is handling the closing for you before you leave the closing.