Can I Protect My Home From the Judgments of Creditors?

How does Minnesota’s homestead exemption protect your home from a guarantee judgment?

Your homestead is exempt from forced sale for a judgment on your personal guarantee “to the amount of area and value hereinafter limited and defined” in chapter 510, and a judgment lien does not attach to exempt property. Minn. Stat. § 510.01 makes the homestead “exempt from seizure or sale under legal process on account of any debt not lawfully charged thereon in writing.”

A personal guarantee is a promise to pay the company’s debt, and the guarantee by itself puts no lien on your home; the terms are covered in what a personal guarantee commits you to. When the lender or landlord sues and wins, the judgment is docketed. Under Minn. Stat. § 548.09, subd. 1, “From the time of docketing the judgment is a lien, in the amount unpaid, upon all real property in the county then or thereafter owned by the judgment debtor.” That lien reaches a cabin, a rental, or a commercial building you own personally in the county, and subdivision 1 adds: “Upon a transcript of the docket being filed with the court administrator in any other county, the court administrator shall also docket it.” On registered (Torrens) land the judgment is not a lien unless the judgment is also recorded on the title. It does not reach the exempt homestead. In Deutsche Bank Nat’l Trust Co. v. Petersen, 748 N.W.2d 306 (Minn. App. 2008), the Minnesota Court of Appeals said: “Minnesota courts have long held that a judgment lien does not attach to exempt property.” The mechanics of the lien itself are covered in how a judgment lien works in Minnesota.

The exemption also changes the negotiation before any judgment exists. In a recent workout of owners’ personal guarantees on a business loan, I told the bank’s attorney that collection against the owners personally would have to contend with Minnesota’s homestead and personal-property exemptions, on top of the senior mortgage, the cost of enforcement, and a likely bankruptcy discharge. A lender that runs those numbers can prefer a negotiated payment to a judgment it cannot collect from your house.

What makes a house your homestead?

A house is your homestead when you own it and live in it as your home. Section 510.01 protects “The house owned and occupied by a debtor as the debtor’s dwelling place, together with the land upon which it is situated.”

Three points decide most guarantor cases:

1. You must actually live there. In Hentges v. P.H. Feely & Son, Inc., 436 N.W.2d 488 (Minn. App. 1989), a debtor who had declared the property his homestead but was not living on it when the judgments were entered was not entitled to the exemption. The court read “occupied” to mean actual occupancy and residence.
2. Either spouse’s title works. Minn. Stat. § 510.04 provides that “If the debtor be married the homestead title may be vested in either spouse, and the exemption shall extend to the debts of either or of both.” A home titled in your spouse’s name is still the homestead for your guarantee debt.
3. An equitable interest counts. The same section says “Any interest in the land, whether legal or equitable, shall constitute ownership, within the meaning of this chapter.”

How much home equity does the exemption protect?

The exemption protects your equity in the home up to a dollar cap. Minn. Stat. § 510.01 creates the exemption, and Minn. Stat. § 510.02 limits its value and acreage. The cap was $510,000 until July 1, 2026. The Minnesota Department of Commerce’s Historic Adjustments table, dated June 25, 2026, lists $540,000 from that date, or $1,350,000 for a homestead used primarily for agricultural purposes.

The codified text of Minn. Stat. § 510.02, subd. 1 still reads: “The exemption per homestead, whether the exemption is claimed by one or more debtors, may not exceed $510,000 or, if the homestead is used primarily for agricultural purposes, $1,275,000, exclusive of the limitations set forth in section 510.05.” The same subdivision limits the land as well as the value: “The homestead may include any quantity of land not exceeding 160 acres.” Subdivision 2 provides that “The dollar amounts in subdivision 1 must change periodically in the manner provided for under section 550.37, subdivision 4a,” and the Commissioner of Commerce publishes the new figures. The published statute catches up later, so confirm the current Commerce figure before you rely on a number.

The cap measures equity, not market value. Baumann v. Chaska Bldg. Ctr., Inc., 621 N.W.2d 795 (Minn. App. 2001) arose from an owner’s personal guaranty of his company’s debts to a creditor, and the court held that the value of the exemption in section 510.02 “refers to the value of the debtor’s equity in the property.” In Christensen Law Office, PLLC v. Olean, 916 N.W.2d 876 (Minn. App. 2018), the court applied the same equity rule. For you, the working number is the home’s fair market value minus the mortgages on it. A $900,000 home with a $500,000 mortgage carries $400,000 of equity, which sits inside the current cap.

What happens when your equity is more than the exemption?

When your equity exceeds the cap and no nondebtor holds homestead rights, “rights as a joint tenant or life tenant,” or “rights to take the homestead under section 524.2-402,” the creditor can ask a court to order a sale. The sale can reach the whole property if it cannot be divided without material injury, but no bid may be accepted unless it exceeds your exemption amount. Minn. Stat. § 550.175, subd. 1 provides: “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 court must find whether a nondebtor holds a homestead interest, the amount of your exemption, and whether the market value exceeds the exemption plus existing mortgages. Subdivision 1 then provides: “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.” Subdivision 4 then protects the price: “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.”

One more provision matters when someone who is not liable on the guarantee, such as a spouse who did not sign it or a co-owner on the title, holds rights in the home. Section 550.175, subd. 6 states: “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:” and lists “(1) homestead rights under sections 507.02 and 510.01 to 510.04;” “(2) rights as a joint tenant or life tenant; or” and “(3) rights to take the homestead under section 524.2-402.” Where a nondebtor holds any of those rights, the subdivision’s rule is that the real property “is not subject to execution under this chapter.”

Which debts can still reach your home?

The exemption does not protect you from a mortgage you signed, valid tax liens, or mechanic’s liens. Minn. Stat. § 510.05 provides that the exemption “shall not extend to any mortgage lawfully obtained thereon, to any valid lien for taxes or assessments,” and also excludes laborers’ and material suppliers’ liens and an attorney’s lien obtained under a valid waiver.

For a guarantor, the mortgage exception is the one to check first. Many business loans are secured by a mortgage on the owner’s home in addition to the guarantee, and a landlord may ask for the same thing when enforcing a lease guaranty. When owners have given their bank a mortgage on the home to secure business loans, the homestead exemption does not defeat that mortgage: the lender’s remedy is foreclosure, not a judgment sale, and the exemption cap does not limit it. Section 510.01 also carves out debts “incurred for work or materials furnished in the construction, repair, or improvement of such homestead.”

Two things narrow these exceptions:

1. Your spouse’s signature. Minn. Stat. § 507.02 provides that 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.” Under § 507.01, a conveyance “includes every instrument in writing whereby any interest in real estate is created, aliened, mortgaged, or assigned.” A business-loan mortgage on your home signed by you alone deserves a close look.
2. Waivers. The only homestead waiver the exemption statute names is an attorney’s lien under § 481.13. In Olean, an attorney’s lien did not attach to the client’s homestead because the firm had not obtained a valid waiver. Some guarantees and indemnity agreements contain a homestead waiver clause; in Petersen, the court declined to address a claimed waiver in an indemnity agreement because it was not properly before the district court. Read your guarantee for one.

What happens to a docketed judgment when you sell or refinance?

You can sell your homestead free of any guarantee judgment “from which it was exempt in the owner’s hands,” and the sale proceeds stay protected for a period after the sale. Minn. Stat. § 510.07 provides: “The owner may sell and convey the homestead without subjecting it, or the proceeds of such sale for the period of one year after sale, to any judgment or debt from which it was exempt in the owner’s hands, except that the proceeds of the sale are not exempt from a judgment or debt for a court ordered child support or maintenance obligation in arrears.” Check the current text before you plan around that period.

The buyer takes the same protection you had. In Hentges, buyers who purchased a homestead on a contract for deed took the property free of the seller’s judgment creditors, and the court quoted the Minnesota Supreme Court: “The grantee of the homestead property acquires the title to the property exempt or immune from the claims of grantor’s creditors.”

A refinance works the same way on priority. In Petersen, a judgment was docketed before the homeowners’ new mortgage was recorded, and the court held that if the home was exempt, “the judgment lien did not attach to the property when the judgment was docketed,” so the later mortgage would have priority. The court sent the case back because whether the home was exempt “requires factual determinations regarding the value of the homeowners’ equity in the home and the size of the property.” The priority rule is covered in more depth in judgment liens and later-recorded mortgages.

Why can moving the house into your spouse’s name backfire?

Retitling your home after a guarantee claim arises protects little that the exemption does not already protect. Under Minn. Stat. § 513.44, a transfer is “voidable as to a creditor” when made “with actual intent to hinder, delay, or defraud any creditor of the debtor.”

The statute lists signs a court may consider, and a deed to your spouse after the bank’s demand letter fits several: “the transfer or obligation was to an insider;” “the debtor retained possession or control of the property transferred after the transfer;” and “before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;” A spouse is an insider under the act’s definitions.

The exempt part of your equity is different. Minn. Stat. § 513.41 excludes from the act’s definition of an asset “property to the extent it is generally exempt under nonbankruptcy law; or” and Hentges quoted the older rule that “Exempt property is not susceptible of fraudulent alienation.” Those words cover only the equity within the cap. A transfer gains nothing for that equity, because a creditor could not have reached it anyway.

When an owner facing a lawsuit asked me whether assets held in a revocable trust were protected, I suggested holding off on moving assets, retitling anything, or changing the trust, because transfers made while a lawsuit is pending can be unwound by a court and can create a problem worse than the claim itself.

How do bankruptcy and federal collection change the answer?

In bankruptcy, federal law lets you claim the state exemption list, which includes the Minnesota homestead exemption, instead of the federal list. 11 U.S.C. § 522(b)(1) provides that “an individual debtor may exempt from property of the estate the property listed in either paragraph (2) or, in the alternative, paragraph (3) of this subsection.” Paragraph (3) covers property exempt under the law of the place where your domicile was located for the period the statute sets immediately before you file, so a recent move into Minnesota can change which state’s list applies. When you elect the state list, 11 U.S.C. § 522(p)(1) adds that “a debtor may not exempt any amount of interest that was acquired by the debtor during the 1215-day period preceding the date of the filing of the petition that exceeds in the aggregate” a dollar amount set in that paragraph. That amount is adjusted periodically, and the limit reaches “real or personal property that the debtor or dependent of the debtor claims as a homestead.” Under 11 U.S.C. § 522(p)(2)(B), that amount does not include “any interest transferred from a debtor’s previous principal residence (which was acquired prior to the beginning of such 1215-day period) into the debtor’s current principal residence, if the debtor’s previous and current residences are located in the same State.” Section 522(p)(2)(A) also provides: “The limitation under paragraph (1) shall not apply to an exemption claimed under subsection (b)(3)(A) by a family farmer for the principal residence of such farmer.” Check the current text before relying on that period or amount.

A bankruptcy discharge can also clear the docketed judgment from the county record. Under Minn. Stat. § 548.181, subd. 4, when a creditor objects, “the court shall order the judgment discharged except to the extent that: (1) the debt represented by the judgment was not discharged by the bankruptcy discharge; or (2) the judgment was an enforceable lien on real property when the bankruptcy discharge was entered.” When the judgment was an enforceable lien on some but not all of your real property, the statute provides that the discharge is entered only as to the property not subject to an enforceable lien. Because a judgment lien does not attach to an exempt homestead, an exempt home falls on the discharged side of that line. Whether the guarantee debt itself is discharged is covered in whether bankruptcy discharges a personal guarantee.

If the United States itself is collecting the debt under the Federal Debt Collection Procedures Act, 28 U.S.C. § 3014(a) provides that “An individual debtor may, in an action or proceeding under this chapter, elect to exempt property listed in either paragraph (1) or, in the alternative, paragraph (2).” Paragraph (2) includes property exempt under the state law of your domicile, measured by where your domicile was located for the period the statute sets immediately before the United States files its application. A debtor whose domicile was in Minnesota for that period can elect the state list, which includes the homestead exemption, so a recent move into Minnesota can change which state’s list applies. For spouses, the section adds: “If such action or proceeding is against debtors who are husband and wife, one debtor may not elect to exempt property listed in paragraph (1) and the other debtor elect to exempt property listed in paragraph (2). If the debtors cannot agree on the alternative to be elected, they shall be deemed to elect paragraph (1).” Paragraph (1) is “property that is specified in section 522(d) of title 11,” the federal bankruptcy list.

How Do You Keep Your Home Safe From a Guarantee Judgment?

A guarantee judgment is a serious problem for your business finances, but Minnesota law keeps it away from the house you live in unless you mortgaged that house to the lender, your equity runs past the cap, or the land runs past the 160 acres a homestead may include. Before you sign a new guarantee, read whether it comes with a mortgage. After a judgment, the steps that protect you are staying in the home, keeping the title where it is, and knowing your equity number. If a judgment was entered against you by default, vacating a judgment may also be an option. More on property and lender disputes is in my real estate section. If you would like a second set of eyes on a guarantee, a demand letter, or a judgment that touches your home, email aaron@aaronhall.com with a brief description of the situation.