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The New Massachusetts Homestead Law takes effect March 16, 2011.

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The long awaited and much needed revision to the Massachusetts Homestead Law will be taking effect on March 16, 2011. It can be found at Massachusetts General Law Ch 188 §1-10. The Homestead Law has caused more debate among real estate practitioners than almost any other statute, confusion seemed to be the only consensus that was ever reached. Regarding the Old Homestead basic issues were debated such as was a mortgage a release of the homestead, did a spouse have to sign a deed even if they were a non-title holder, what effect did the filing of a subsequent homestead have on an existing homestead. The New Homestead Act was enacted to resolve all these and other issues inflatable toys.

There are now three types of Homesteads available. One is automatic and two must be created by the filing of a Homestead.

I “Automatic Homestead”

There is an automatic protection in the amount of $125,000.00 for an individual’s principal residence against subsequent attachment. The property must be occupied or intended to be occupied as a principal residence of the property’s owner. The protection is provided to the individual and the other family members of his or her family living at the property.

The two non-automatic Homesteads available are as follows:

II “Basic Homestead”

The protection provided to those who file a Homestead. The amount of protection is equal to $500,000.00 if the property is occupied or intended to be occupied as their principal residence.

III “Elderly\Disabled Homestead”

This protection is provided only to the person making the Elderly or Disabled filing. The protection provided is in the amount of $500,000.00. The filer must be either 62 or older or meet the definition of disabled that is included in the statute. The property must also be occupied or intended to be occupied as the filer’s principal residence.

How do you establish an Automatic Homestead?

As long as you meet the requirements nothing needs to be filed.

How do you establish a Basic Homestead?

In order to establish the Basic Homestead the requirements of Section 5 of the statute must be complied with. An outline of these requirements is as follows:

  1. The declaration of Homestead must be signed by each owner of the property.
  2. If there is a non-titled spouse they must be identified in the Declaration.
  3. The declaration shall state that the each person named in it occupies or intends to occupy the home as their principal residence.
  4. Trustees of property held in trust can now file a declaration of homestead on behalf of the beneficiaries of the trust who occupy the property as their principal residence.

The Homestead can no longer be created as part of a deed it must be a separate filing.

How do you establish an Elderly\Disabled Homestead?

  1. The same requirements for the Basic Homestead must be complied with and also:
  2. There must be a statement that the owner to be benefited is an elderly person or a disabled person and
  3. An original or certified copy of a disability award letter issued to the person by the United States Social Security Administration or a letter signed by a physician registered with the board of registration of medicine certifying that the person meets the disability requirements as set forth in the Act. The award letter or the physician’s letter shall be recorded with the declaration.

How can any Homestead be terminated?

  1. A deed signed by the owners or by the owner and the non-title holder spouse or former spouse who reside at the home as a principal residence
  2. If a Trustee established the Homestead then a deed signed by the trustee
  3. A release signed by any of the above
  4. A new Basic Homestead declaration being filed or
  5. An abandonment of the home as a principal residence

How can an Elderly\Disabled Homestead be terminated?

  1. Deed or release signed by the person who declared the Elderly\Disabled Homestead
  2. Acquisition of a new Homestead
  3. An abandonment of the home as a principal residence

Important Highlights:

Does the non-title spouse have to execute a mortgage?

No, only the title spouse needs to execute the mortgage and no additional language needs to be added to the mortgage for the Homestead to be subordinated to the mortgage. The requirement by the lender that the Homestead be released is now prohibited.

How do you handle a change in marital status when a document is executed?

The Act requires the identification of the non-title spouse as part of the declaration. The subsequent divorce, death or remarriage can alter the current information of those protected by the Homestead. The change in status can be resolved by including the current information in the deed, release or mortgage. The document containing the statement regarding the marital status of the grantor may be relied upon in good faith. An affidavit must be executed by the grantor, releaser or mortgagor under the penalties of perjury, stating that at the time the document was executed that the affiant had no spouse or partner entitled to claim the homestead. The affidavit may be recorded with the deed, release or mortgage containing the recital.

If the single owner marries do they need a new Homestead?

If property is purchased by a single person who later marries the new spouse is automatically protected by the declaration of homestead right. As a result of this every deed should include the marital status of the grantor and if married then the non-title spouse must also execute the deed.

What happens to existing Homesteads?

All existing homesteads in effect as of March 16, 2011, shall continue in full force and effect, and shall be governed by the New Act notwithstanding their failure to comply with the new execution requirements.

Special Note regarding closings:

The Closing attorney at each transaction must provide the mortgagor with a written notice that shall include a summary of the differences between the automatic homestead protection and those acquired by making a declaration.

This is not a complete evaluation of the new law but only a brief summary. A person that desires to create a Homestead should seek the assistance of a Massachusetts Attorney with an understanding of the New Homestead Act. We at Topkins & Bevans can provide this service to you. You can contact me at rbevans@topbev.com, my office number is 781-890-6230 ext. 241 and cell 781-858-6468.

NFLPA wins one in Court. Will it have any impact on the current negotiations?

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Judge David S. Doty, ruled this week in favor of the NFLPA against the NFL. This ruling could have a significant impact on the current negotiations regarding a new Collective Bargaining Agreement (the “CBA”).

The Players had alleged that the Owners and the NFL had ignored their obligation to act in good faith and to use their best efforts to maximize the total revenues for both the NFL and the Players when they were renegotiating or negotiating the most recent broadcast contracts (“TV Deals”). These obligations were in place as part of the White Stipulation and Settlement Agreement (the “SSA”). The matter was heard in January by Stephen B. Burbank, the special master assigned to hear the action.

The SSA has been in place since 1993. It was part of a settlement in antitrust class action brought by Reggie White and other players. It is often referred to as the White Settlement or the SSA. The NFL and the NFLPA entered into a CBA at that time that mirrors the SSA. The CBA was amended and extended in 1996 and 1998 and then renegotiated in 2006 covering the period of 2006-2012. The NFL had the right in the CBA to opt out of the last two years of the CBA and on May 20, 2008, they took advantage of this provision and opted out. Based upon this opt-out the SSA and the CBA are set to expire on March 4, 2011. The NFLPA and the NFL have been negotiating in an attempt to reach an agreement for a new CBA. During these negotiations the Owners have recognized that a lockout was “Realistically possible in order to achieve a new agreement more favorable to their interests.” This perspective is crucial to embrace when reviewing Judge Doty’s decision. You must also remember that this is not a work stoppage on the part of the Players but a lockout by the Owners inflatable shade structures.

The TV Deals generate about one-half of the NFL’s total revenues. These revenues are shared by the Owners and the Players. The NFLPA does not negotiate the TV Deals the NFL does it alone. The existing TV Contracts did not require the Networks to pay the NFL if there was a lockout in 2011. The NFL was concerned about lost revenue and the possibility that certain of its loan obligations could be considered in default if the TV revenue was not being received as a result of the lockout. The NFL thought that all of these events would decrease their bargaining power with the Players.

The NFL shortly after opting out of the CBA began negotiations with the Television Networks that broadcast NFL games in the hope of modifying the existing TV Deals. It renegotiated the DirectTV deal so that the NFL was actually paid more in 2011 if they locked the Players out. DirectTv “would have considered paying more in 2009 and 2010 to have the [the work-stoppage provision] go away” but that was not part of the final agreement. The agreement was extended and the rights fees for 2009 and 2010 stayed the same. The TV Deals in place with CBS and Fox prior to the renegotiation required the NFL to pay the Networks refunds in 2011 if there was a lockout. The renegotiated deals again did not have increased fees for 2009, 2010 or 2011, but the lockout penalties were decreased. The deal with NBC also had the same work-stoppage penalty in it. Again the NFL did not seek increased rights fees for 2009, 2010 or 2011, but the new agreement had increased rights fees for 2012 and 2013. A common theme was developing the deals had been modified so that the lockout penalties were significantly diminished and later revenues increased, assumedly after the end of the lockout. ESPN had a contract in place that was to expire in 2013. The contract was not extended but “the work-stoppage provision was amended”. The new deal was directly linked to a work-stoppage. There were also the deals with Comcast and Verizon that were renegotiated. Judge Doty wrote “In total, the NFL negotiated access to over $4 Billion in rights fees in 2011 if it locks out the Players. Of that sum, it has no obligation to repay $421 million to the Broadcasters.”

The Players claimed that the owners had failed as required by the SSA to maximize total revenues for 2009 and 2010 which would benefit both the Players and the NFL. After a trial in January the special master ruled that the NFL had violated its obligations under the SSA in negotiating the TV Deals, but only partially. The special master granted the players $6.9 million in damages for the NBC contract. Judge Doty ruled that the reasoning applied by the special master was incorrect. When the NFL was negotiating these deals it could apply the principle of “Sound Business Judgment” but this does not allow the NFL to do this “at the expense of maximizing total revenues during the SSA.” The NFL had negotiated or renegotiated these TV deals “to benefit its exclusive interest at the expense of, and contrary to, the joint interests of the NFL and the Players.” In addition the NFL by failing to seek revenue modifications for 2009-2010 seasons when it modified practically every other term of the agreements did not make the required Best Efforts in these negotiations.

Judge Doty seemed to be particularly moved by the NFL’s vast market power which one television executive described as the ability to have the NFL Commissioner call you and state “we’re done, pay this or move on … [the NFL has] market power like no one else”. As a result of this market power the NFL could have gotten more revenues for the 2009 and 2010 seasons when it entered into these modified contracts, but chose to emphasis the best way to position the Owners if there was a lockout to the determent the Players. The NFL had told the networks during these negotiations that “opposition to lockout provisions to be a deal breaker and clearly a deal it would not consider.”

The Court’s has ordered a new hearing to be held to determine what relief it should grant the Players. The Court has indicated that both money damages and the possibility of injunctive relief would be considered.

The NFL has indicated that it was prepared for this ruling and that it does not effect its negotiating position. This may be the case, but it seems to fly in the face of logic. If the NFL negotiated these deals to position itself for a lockout and there is now the possibility that you may not have this revenue and if as the NFL believed the lockout could result in the default of some of its obligations there is a substantial price to pay as a result of the lockout that otherwise would not have to have been paid. We may know if this decision effected the NFL by the result of this week’s mediated negotiations. Hopefully, a fair agreement will be reached so the league can continue to function to the benefit of both the Owners and the Players and for all those people that rely on the NFL for their livelihoods.

Link to the decision http://images.nflplayers.com/mediaResources/files/Lockout%20Insurance%20Case%20Decision.pdf

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