Minnesota Homestead Law: Not Just Reducing Property Taxes

By
Real Estate Sales Representative with Shrewd Real Estate
http://actvra.in/FXN

At a closing, everyone who is buying a home as their principal residence in Minnesota is informed about how to homestead their new property.  People are generally more than willing to homestead a property as they feel that it will keep their property taxes lower.  While this is true, it is not the only reason to homestead a property.

The Homestead Law is meant to protect a family from a forced sale (foreclosure) on their home by unpaid creditors.  In a nutshell, it's a safe haven for your money.

There are several stipulations that are mandated in order for a property to be homesteaded.  The easiest description is that your homestead needs to be your principal residence.  There are other rules involved, but this rule of thumb covers about 99% of all situations.

What does homesteading a property protect you from?

The Homestead Law protects home owners against foreclosure of their home by unpaid creditors.  It does not protect a home owner from foreclosure due to lack of property tax or special assessment payments, mechanics liens (work performed by contractors on the property), lack of payment to mortgage company, or failure to pay association dues.  All of these items are attached to your property and will supersede the Homestead Law.  Rule of thumb: The banking institutions and the government will always get their money.

This also brings up a very good point about having good title work done on a property prior to closing the sale.  You do not want any outstanding liens for assessments or lack of payment to a contractor to make you lose your newly purchased house to foreclosure.  I won't go into this here; It's a different topic for a different day.

There are also a couple of limitations to the amount of money that is covered by Homestead Law.  In Minnesota, homestead protection is limited to 160 acres and $300,000 for a residential homestead ($750,000 for an agricultural homestead).

Please note that these figures are for Minnesota Homestead Laws and do not entail what other States utilize as their guidelines.  I've heard that the old CEO of Enron moved into a property in Florida when his business came under attack.  The reason, there is no limit to the value that homesteading can protect in that State.  He can shelter millions of dollars against judgments in court about his business practices.

If you are in question about homestead law, seek competent legal advice.  I don't pretend to be a lawyer that knows everything related to real estate law, but I know enough to get me in trouble.  If you'd like, post your questions and comments here.  If I don't know the answers, I know someone who will.

 

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty St Cloud

JasonTangen.EdinaRealty.com - Search Homes for Sale in Minnesota

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Anonymous #7
Anonymous
Carol Boisvert

I have a questions regarding the monetary downside to leaving your homestead property on a lake and moving to a smaller home?  If they still own the lake home. I am asking this for my elderly parents who live in Minnesota. Thank You

July 26, 2009 10:04 AM
Rainer
17,672
Jason Tangen
Shrewd Real Estate

Carol,

It depends on their situation if there is a downside to moving off the lake.  Sometimes their is just too much work for an elderly couple to maintain at a lake property and they need to move into move of transitional housing.  Maybe not quite senior housing, but more like a patio home development.  Situation really dictates in your scenario.  Give me a call at (320) 492-2667 with some of the particulars and I will go over my thoughts with you.

July 30, 2009 06:51 AM
Anonymous #9
Anonymous
Janine J

I am potentially moving to another state to pursue a career opportunity.  I intend to rent in that state for a few years while I get settled, and keep my condo in MN for use when I return home for visits.   I also own a townhome in MN in which a relative lives (she pays no rent or expenses).   I maintain personal homestead on the condo as it is my primary residence and resident relative homestead on the townhome.   As I will be working and living in another state, do I need to change the homestead status on the condo?

July 20, 2011 09:22 AM
Anonymous #10
Anonymous
Keith

My wife and I own our home. If I buy a townhome and my mother lives in it and pays me rent, am I still allowed a homestead on both properties?

July 29, 2011 03:30 PM
Anonymous #11
Anonymous
Keith Jensen

Ian't There something in the homestead law that alows a person to homestead connected properties also?

August 06, 2012 02:01 PM
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Rainer
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Jason Tangen

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The real estate information and opinions contained within this blog do not represent the opinions of Edina Realty, Berkshire Hathaway, Home Services of America or any of their collective affiliates.