I want to buy a property at a foreclosure and the owner has filed a Homestead. Will that create any rights in the owner which would impact my rights as a buyer at the foreclosure sale?

Assuming you are buying at a foreclosure sale being conducted by the holder of a first mortgage, all rights in the property after the first mortgage gets wiped out as a result of the foreclosure, including the owner's Homestead exemption. Moreover it will not impact the eviction, if you need to go through an eviction, since, as a buyer at a foreclosure sale, there is no landlord-tenant relationship so the general notice requirements and the ability of the court to permit extensions does not apply. The Homestead comes into play to protect the owners equity in the property against involuntary liens. So if the foreclosure sale resulted in a price which was over and above the amount necessary to payoff the first mortgage, there would be a surplus created which the first mortgage holder is obligated to pay over to the owners of the equity of in the property. If there are junior mortgages on the property or other liens, the attorney for the first mortgagee will generally bring a suit in court and asked the court to determine who has the right to the surplus funds. That is called interpleader action. If the owner had filed a Homestead, the owner could take the position that the owner would be entitled to the surplus since the Homestead rights would attach to the surplus funds in the priority that they were held in the real estate. So, for example, let us assume the mortgage was $100,000 and there was an attachment far $20,000 and the owner filed a Homestead and lets further assume that the sales price was $250,000. Under these circumstances the owner would argue that the owner would be entitled to the entire surplus because the Homestead exemption is in the amount of $500,000 and so that the homeowner would be entitled to the entire surplus up to that amount. We do not have any cases which have decided these issues, including what rights the creditor may then have to make a claim against the cash that the owner may get as a result of the Homestead.

If you have questions about this or any other legal matter, please contact Tom Bennett at (617) 531-6574 or tvb@barronstad.com.

Sign up to receive Tom Bennett's weekly real estate Q&A from the "Boston Courant."