Laura owns a home in Brookline, Massachusetts worth $750,000, with a mortgage balance of $200,000, giving her $550,000 in equity. She has properly recorded a notarized Declaration of Homestead at the Registry of Deeds. A supplier wins an unsecured civil judgment against Laura for $600,000. What is the maximum amount of equity the judgment creditor can reach in Laura's home?
Correct Answer
A) The creditor can reach $50,000 of equity, because $500,000 is protected by the declared homestead
Under MGL Chapter 188, a properly recorded Declaration of Homestead protects up to $500,000 of equity in a primary residence from unsecured creditor claims. Laura has $550,000 in equity. The first $500,000 of that equity is shielded by the declared homestead. The remaining $50,000 of equity ($550,000 - $500,000) is exposed to the judgment creditor. Therefore, the creditor can reach a maximum of $50,000.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A leasehold estate grants the right to possess and use property for a defined period of time, without conferring ownership.
A life estate is a freehold estate that grants ownership rights for the duration of someone's life.
Real property is immovable land and anything permanently attached to it, while personal property (also called chattels) is movable.
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