If we lose our business, can the bank take our homestead?
Full Question:
We have 2 homes; the one we live in is homesteaded. We are self employed. If we lose our business, can the bank take both homes or just the one that is non-homestead? We heard that the house has be be at a minium value for them to go after it. What is the law?
04/23/2009 |
Category: Real Property ยป Homestead |
State: Minnesota |
#16097
Answer:
Homestead laws are primarily governed by state laws, which vary by state, and allow an individual to register a portion of his real and personal property as "homestead," thereby making that portion of the individual's estate off-limits to most creditors. Homestead laws also deal with such matters as the amount of real estate taxes owed on the home, or the ability of the homeowner to mortgage or devise the home under a will, among other issues. State laws often provide a homestead exemption for older citizens so that a certain dollar amount of the home's value is exempt from real estate taxes. Some states require a recorded claim to be filed in order to claim a homestead exemption, while other states require a designation of homestead. Almost all states require a designation in order to receive a homestead tax exemption. Homestead exemption forms are usually available from the county tax assessor's office. Other laws may provide rules for a person's ability to mortgage or devise the homestead.
The following are MN statutes:
510.01 Homestead Defined; Exempt; Exception.
The house owned and occupied by a debtor as the debtor's
dwelling place, together with the land upon which it is
situated to the amount of area and value hereinafter limited
and defined, shall constitute the homestead of such debtor
and the debtor's family, and be exempt from seizure or sale
under legal process on account of any debt not lawfully
charged thereon in writing, except such as are incurred for
work or materials furnished in the construction, repair, or
improvement of such homestead, or for services performed by
laborers or servants and as is provided in section 550.175.
550.175 Execution On Real Property That Includes Homestead.
Subdivision 1. Order directing sale of real property.
The executing creditor must obtain an order from the court
directing a sale of the real property that includes a
homestead before service of the notice of execution on real
property containing the homestead of the debtor. The order
shall contain the following findings:
(1) whether the real property is the homestead of a
nondebtor;
(2) the amount of the debtor's homestead exemption, if any;
and
(3) whether the fair market value of the real property
exceeds the sum of the debtor's homestead exemption and the
present encumbrances.
If the court finds that there is no nondebtor with a valid
homestead interest in the real property and that the fair
market value of the homestead real property exceeds the sum
of the debtor's homestead exemption and the present
encumbrances, the court shall order a sale of the real
property for cash or cash equivalents to the extent of the
homestead exemption at the time of sale.
Subd. 1a. Notification of homestead designation. If
real property is to be sold on execution and the property
contains a portion of the homestead of the debtor, the
debtor must be notified by the executing creditor that the
homestead may be sold and redeemed separately from the
remaining property. The notice in subdivision 2 must be
included in the notice of execution served on the debtor
under section 550.19.
Subd. 2. Homestead designation notice. The following
notice must be included in the execution notice of real
property containing a homestead that is served on a debtor
under section 550.19. The notice must be in 10 point
capitalized letters.
"PART OF THE PROPERTY TO BE SOLD CONTAINS YOUR HOUSE. YOU
MAY DESIGNATE THE AREA OF A HOMESTEAD TO BE SOLD AND
REDEEMED SEPARATELY.
YOU MAY DESIGNATE THE HOUSE YOU OCCUPY AND ANY AMOUNT OF THE
PROPERTY AS A HOMESTEAD. THE DESIGNATED HOMESTEAD PROPERTY
MUST CONFORM TO THE LOCAL ZONING ORDINANCES AND BE COMPACT
SO THAT IT DOES NOT UNREASONABLY REDUCE THE VALUE OF THE
REMAINING PROPERTY.
YOU MUST PROVIDE THE CREDITOR CAUSING THIS PROPERTY TO BE
SOLD, THE SHERIFF, AND THE COUNTY RECORDER WITH A COPY OF
THE LEGAL DESCRIPTION OF THE HOMESTEAD YOU HAVE DESIGNATED
BY TEN BUSINESS DAYS BEFORE THE DATE THE PROPERTY IS TO BE
SOLD."
Subd. 3. Designation of homestead property. The debtor
must designate the legal description of the homestead
property to be sold separately and the debtor's estimate of
the value of the property. The homestead property designated
may include any amount of the property. The designation must
conform to local zoning, include the dwelling occupied by
the debtor, and be compact so that it does not unreasonably
affect the value of the remaining property. The debtor must
serve a copy of the designation on the executing creditor,
the sheriff, and the county recorder by ten business days
before the sale is scheduled.
Subd. 4. Sale of property. (a) If the sheriff receives
a homestead property designation under subdivision 3, the
sheriff must offer and sell the designated homestead
property, and the remaining property, separately, unless the
executing creditor denies the right to the exemption,
objects to the property designated, or claims the value
exceeds the exemption.
(b) If the executing creditor is dissatisfied with the
homestead property designation or the debtor's valuation of
the property, upon proper motion to the district court of
the county in which any part of the property is located, the
executing creditor is entitled to a court approved
designation of the homestead and a court determination of
value. The court shall either approve the debtor's
designation or cause the property to be surveyed and order a
homestead designation consistent with the standards of
subdivision 3 and require an appraisal of fair market value,
as applicable. The court's designation of the homestead
property must conform to the debtor's request, to the extent
not inconsistent with the standards of subdivision 3.
(c) The court, in determining appraised value, shall review
any appraisals provided by the debtor and executing creditor
and may require a court appointed independent appraisal. The
appraisals shall evaluate the property's fair market value,
net of reasonable costs of sale.
(d) If the court determines that the property claimed as a
homestead exceeds in value the amount of the homestead
exemption or if the court determines that the property
cannot be divided without material injury, the court shall
order the sale of the entire property, including the
designated homestead for cash or cash equivalents to the
extent of the homestead exemption at the time of sale.
(e) At the sale, no bid may be accepted unless it exceeds
the amount of the homestead exemption. If no bid exceeds the
exemption, the homestead is exempt.
(f) The cost of any court ordered survey or appraisal and of
the sale must be collected on the execution, if the debtor
designated as the debtor's homestead a greater quantity of
property, property of greater value than the debtor was
entitled to, or designated a parcel that does not meet the
standards of subdivision 3. In all other cases, the costs
shall be borne by the executing creditor.
Subd. 5. Redemption. The debtor may redeem the
designated homestead, the remaining property, or the entire
property including the homestead. The period of redemption
for the designated homestead or the remaining property is
the same as the period of redemption for the entire property
including the designated homestead.
Subd. 6. Real property not subject to execution. Real
property that includes a homestead as defined under
section 510.01 is not subject to execution under this
chapter if there is a nondebtor with:
(1) homestead rights under sections 507.02 and 510.01 to
510.04;
(2) rights as a joint tenant or life tenant; or
(3) rights to take the homestead under section 524.2-402.
507.02 Conveyances by Spouses; Powers of Attorney.
If the owner is married, no conveyance of the homestead,
except a mortgage for purchase money under section 507.03, a
conveyance between spouses pursuant to section 500.19,
subdivision 4, or a severance of a joint tenancy pursuant to
section 500.19, subdivision 5, shall be valid without the
signatures of both spouses. A spouse's signature may be made
by the spouse's duly appointed attorney-in-fact.
A husband and wife, by their joint deed, may convey the real
estate of either. A spouse, by separate deed, may convey any
real estate owned by that spouse, except the homestead,
subject to the rights of the other spouse therein; and
either spouse may, by separate conveyance, relinquish all
rights in the real estate so conveyed by the other spouse.
Subject to the foregoing provisions, either spouse may
separately appoint an attorney-in-fact to sell or convey any
real estate owned by that spouse, or join in any conveyance
made by or for the other spouse. Use of a power of attorney
is subject to section 518.58, subdivision 1a. A minor spouse
has legal capacity to join in a conveyance of real estate
owned by the other spouse, so long as the minor spouse is
not incapacitated because of some reason other than that
spouse's minor age.
510.02 Area and Value; how Limited.
Subdivision 1. Exemption. The homestead may include
any quantity of land not exceeding 160 acres. The exemption
per homestead, whether the exemption is claimed by one or
more debtors, may not exceed $300,000 or, if the homestead
is used primarily for agricultural purposes, $750,000,
exclusive of the limitations set forth in section 510.05.
Subd. 2. Adjustment of dollar amounts. The dollar
amounts in subdivision 1 must change periodically in the
manner provided for under section 550.37, subdivision 4a.
The commissioner of commerce shall include the changes in
the dollar amounts as part of the announcement and
publication made under those provisions.
524.2-402 Descent of Homestead.
(a) If there is a surviving spouse, the homestead,
including a manufactured home which is the family residence,
descends free from any testamentary or other disposition of
it to which the spouse has not consented in writing or as
provided by law, as follows:
(1) if there is no surviving descendant of decedent, to the
spouse; or
(2) if there are surviving descendants of decedent, then to
the spouse for the term of the spouse's natural life and the
remainder in equal shares to the decedent's descendants by
representation.
(b) If there is no surviving spouse and the homestead has
not been disposed of by will it descends as other real
estate.
(c) If the homestead passes by descent or will to the spouse
or decedent's descendants or to a trustee of a trust of
which the spouse or the decedent's descendants are the sole
current beneficiaries, it is exempt from all debts which
were not valid charges on it at the time of decedent's death
except that the homestead is subject to a claim filed
pursuant to section 246.53 for state hospital care or
256B.15 for medical assistance benefits. If the homestead
passes to a person other than a spouse or decedent's
descendants or to a trustee of a trust of which the spouse
or the decedent's descendants are the sole current
beneficiaries, it is subject to the payment of expenses of
administration, funeral expenses, expenses of last illness,
taxes, and debts. The claimant may seek to enforce a lien or
other charge against a homestead so exempted by an
appropriate action in the district court.
(d) For purposes of this section, except as provided in
section 524.2-301, the surviving spouse is deemed to consent
to any testamentary or other disposition of the homestead to
which the spouse has not previously consented in writing
unless the spouse files in the manner provided in
section 524.2-211, paragraph (f), a petition that asserts
the homestead rights provided to the spouse by this section.
