Legal Memorandum: Written Mortgage Requirement in MN

Issue: Does a mortgage need to be in writing in order for a homestead to be used as a security for guaranties?

The Minnesota Homestead Exemption Statute, Minn. Stat. § 510.01, provides:

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.

Minn. Stat. § 510.01 (2012) (emphasis added).  The emphasized language indicates that if the mortgage were in writing a homestead could be used as security for guaranties.  See, e.g., Business Bank v. Hanson, 769 N.W.2d 285 (Minn. 2009); LaMont v. Premier Bank Minn., No. A11-211 (Minn. Ct. App. Oct. 11, 2011) (noting that a property developer’s commercial loan was secured by the personal guaranties of the developer’s principal and his wife, which guaranties were, in turn, secured by a mortgage on the couple’s residence).  In the Hanson case, the Minnesota Supreme Court held that a mortgage on the individual guarantor’s home, which was executed to secure the guaranteed debt of a joint venture of which he was a member, was valid and enforceable.  Business Bank sought to foreclose on the mortgage when the borrower defaulted, and […]