Marital dissolution, more commonly known as divorce, is an element of my practice that I do not write about much. Most of the law applicable to divorces is pretty straightforward, but a recent appellate opinion exemplified a creative use of the homestead exemption against judgments in the context of a marital dissolution case.
The homestead exemption is an exception to the general rule that a monetary judgment becomes a lien on the judgment debtor’s real property once the judgment is docketed. Minn. Stat. § 548.09, subd. 1 (2016); Minn. Stat. § 510.01 (2016). The homestead exemption involves a conflict between a creditor’s right to be paid and a debtor’s interest in protecting his or her home, but the “policy of giving the debtor ‘sanctuary’ from just claims in his ‘homestead’ has prevailed with significant uniformity.” Denzer v. Prendergast, 267 Minn. 212, 216, 126 N.W.2d 440, 443 (1964). The homestead exemption is to be liberally construed in favor of protecting the homestead asset. Torgelson v. Real Prop. Known as 17138 880th Ave., Renville Cty., 7 49 N.W.2d 24, 26 (Minn. 2008). This disposition creates a favorable use in favor of a non-judgment spouse in a dissolution case.
In an instance where one spouse, but not the other, is a judgment debtor the homestead application can be used by the non-debtor spouse to his or her advantage. If the non-debtor spouse retains the marital residence, then judgments against the judgment creditor spouse do not, as a matter of law, attach to the homestead residence. Thus, the non-debtor spouse who retains the homestead retains it free and clear of the judgment liens, creating a much more favorable marital estate allocation.
If you have questions about your marital estate and assets, feel free to call. I can help navigate you through the financial expectations of a dissolution.