One of the best parts about being a lender or real estate agent in New England is being able to make homebuyer dreams come true across state lines! But being able to do business in many different states can be cause for confusion too - especially when you have clients considering purchasing on either side of the border.
At Cohen Closing, we currently handle residential real estate transactions in both Maine and New Hampshire, but we know we have lots of clients who also do business in Massachusetts. And "homestead" - whether it be rights or exemptions - means something a little bit different in each state! So let's break it down.
What does homestead mean in New Hampshire?
New Hampshire has the homestead exemption. According to CATIC, the homestead exemption in New Hampshire allows a property owner to protect up to $120,000 of equity in his or her home from attachments or forced sale by creditors for payments of debt. If the owner is married and it is a primary residence, the exemption amount is $240,000 (or $120,000 per person) even if only one spouse is on the title to the property.
Speaking of spouses, they are granted homestead rights in the property when it is a primary residence even if they are a non-titleholder. For this reason, non-titleholding spouses must sign off to release their homestead right on the mortgage when the property is being refinanced and their homestead rights have attached. They'll also need to sign off on the deed when the property is being sold. Unlike other states, New Hampshire's homestead exemption is automatic!
Now there are exceptions! According to New Hampshire law, there are three items that take priority over the homestead exemption. These include mechanic's liens, property taxes, and unpaid assessments from condo or homeowner associations.
What does homestead mean in Massachusetts?
Although Cohen Closing doesn't currently operate in Massachusetts, we know lots of our clients do! Massachusetts' homestead exemption is similar to New Hampshire's with a few key differences. According to the MA Secretary of State, the homestead exemption in Massachusetts also automatically granted in the amount of $125,000 if the property is a primary residence.
The $125,000 exemption is only automatic when the home does not declare a homestead exemption with the Registry of Deeds. Since the automatic exemption is likely not enough to protect the full property value, most homes declare homestead by filing a "Declaration of Homestead" with the Registry of Deeds. When filed, the exemption protects up to $500,000 of the property value per residence, per family.
Just like in NH, the exemption protects each owner residing in the home and the owner's spouse from attachments and forced sales. In addition, the MA homestead exemption also gives all family members the right to use, occupy and enjoy the house as their principal residence. Protection also automatically extends to new spouse and stays with a divorced spouse.
What does homestead mean in Maine?
Unlike New Hampshire and Massachusetts, Maine's homestead exemption does not provide protection against attachments and forced sale. But it does provide a reduction in property taxes! According to the Maine Revenue Services, the Maine homestead exemption provides a reduction of up to $25,000 in the value of your home for property tax purposes.
To qualify for the exemption, you must be a permanent resident of the state of Maine, the home must be your primary residence, and you must have owned a home in Maine for twelve months before applying. The application must be filed with the town or municipality where the property is located, and it must be submitted before April 1 of that year in order to qualify.