Senate committee hears push to raise New Hampshire homestead exemption; debate focuses on $1 million proposal and trust language

CONCORD, N.H. — Lawmakers and attorneys on Tuesday heard hours of testimony on House Bill 617, a proposal to raise the state's homestead exemption that now protects a homeowner's equity from some creditor actions.

Representative Melissa Litchfield, sponsor of the bill, told the Senate Ways and Means Committee the current individual exemption of $120,000 (which doubles for married couples under current statute) no longer reflects modern housing values and left homeowners exposed. "My goal in this is just simply to protect the roof over your head," Litchfield said, explaining her bill would increase the exemption to $1,000,000 and include provisions for primary residences, qualifying trusts and a six'month reinvestment window after a sale.

Supporters including bankruptcy attorneys and small'business advocates described practical effects when equity exceeds the exemption. An attorney who said he represents debtors in bankruptcy urged a substantial increase, citing the 2023 New Hampshire bankruptcy court decision Brady v. Sumske, which his testimony said limited homestead protection to a single exemption for the owner. "The increase in values of homes has rendered it very possible for trustees in bankruptcy to take homes away from people," he said, urging an exemption that lets households keep homes with modest equity.

Peter Tomposi, an attorney from Nashua, and others linked the exemption to small business risk-taking and entrepreneurship. "Small businesses are really the cornerstone of large parts of the American economy," Tomposi said, arguing that stronger homestead protection preserves entrepreneurs' ability to restart after failure.

The New Hampshire Bankers Association opposed the $1,000,000 level as excessive. Ryan Hill, the association's vice president for government relations, told senators a more historically incremental approach would be prudent and suggested $250,000 for an individual and $500,000 for a married couple as a compromise.

Bankruptcy practitioners who testified described practical details and potential drafting problems. Witnesses supported a reinvestment window that would protect proceeds from a sale for six months if the homeowner buys a new primary residence. At the same time, attorneys warned some statutory language could trigger litigation: one witness questioned a requirement that homeowners give a written notice to the county sheriff about a claimed exemption, calling that procedure "superfluous" and potentially a source of disputes over how notice is given.

Committee members asked several technical questions about trusts, the reinvestment provision and whether the bill protects owners' equity (rather than adding to mortgage liens). Testimony repeatedly emphasized that the statute protects a homeowner's ownership interest (equity) and does not erase underlying debt. Several speakers suggested clarifying the bill's trust language to specify that revocable (probate-avoiding) trusts, not asset-protection irrevocable trusts, are intended to qualify.

After considerable discussion, senators adopted a committee compromise amendment (reducing the proposed $1,000,000 level) and then debated additional edits intended to make the exemption amount available to one or more owners of a property without making marital status the sole determinant. The committee did not take a final vote on the bill Tuesday; members said they would continue consideration at a later session and seek additional drafting clarifications on trust definitions and notice language.

Votes and amendments taken during the hearing reflected support for narrowing the proposed dollar amount and adjusting technical language, but the committee deferred final action to allow time for further revisions and fiscal review.

If enacted, the bill would change long'standing practice in New Hampshire and affect homeowners who face lawsuits, unsecured creditor actions or bankruptcy. Supporters argued the change would prevent displacement of long'time residents and small business owners whose home equity now often exceeds the century'old exemption. Opponents said a very large jump could unduly favor wealthier homeowners and urged a smaller, phased increase.

Next steps: Committee members said they will continue to refine the bill's definitions for qualifying trusts and the process for notice to sheriffs or registries of deeds, and will return to the question of the dollar amount when they receive additional fiscal and drafting advice.