Title: Donald Rumage v. Robert M. Gullberg

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2000 WI 53 
 
SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
98-1276 
 
 
Complete Title 
of Case: 
 
Donald Rumage,  
 
Plaintiff-Appellant, 
 
v. 
Robert M. Gullberg, Janet Gullberg,  
Advantage Bank F.S.B., and The Bank of  
Elmwood,  
 
Defendants-Respondents. 
 
 
ON CERTIFICATION FROM THE COURT OF APPEALS 
 
 
Opinion Filed: 
June 16, 2000 
Submitted on Briefs: 
      
Oral Argument: 
December 1, 1999 
 
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Racine 
 
JUDGE: 
Stephen A. Simanek 
 
 
JUSTICES: 
 
Concurred: 
      
 
Dissented: 
      
 
Not Participating:       
 
 
ATTORNEYS: 
For the plaintiff-appellant there were briefs and 
oral argument by James O. Vollmar, Waukesha. 
 
 
For the defendants-respondents Advantage Bank, 
FSB, and Bank of Elmwood, there was a brief by Thomas P. Aiello 
and Madrigrano, Zievers, Aiello, Marry & Dowse, S.C., Kenosha, 
and oral argument by Thomas P. Aiello. 
 
 
For the defendants-respondents Robert Gullberg 
and Janet Gullberg, there was a brief and oral argument by 
Michael F. Dubis, Waterford. 
 
 
Amicus Curiae brief by John W. Daniels, Jr., Owen 
Thomas Armstrong and Quarles & Brady, LLP, Milwaukee, and oral 
argument by Owen Thomas Armstrong, for The Wisconsin Land Title 
Association. 
 
2000 WI 53 
 
NOTICE 
This opinion is subject to further editing 
and modification.  The final version will 
appear in the bound volume of the official 
reports. 
 
No. 98-1276 
 
STATE OF WISCONSIN               :  
IN SUPREME COURT 
 
 
Donald Rumage, 
 
 
Plaintiff-Appellant, 
 
 
v. 
 
Robert Gullberg, Janet Gullberg, Advantage 
Bank F.S.B., and The Bank of Elmwood, 
 
 
Defendants-Respondents. 
 
 
 
APPEAL from a judgment of the Circuit Court for Racine 
County, Stephen A. Simanek, Judge.  Affirmed. 
 
¶1 
WILLIAM A. BABLITCH, J.   This case comes before the 
court on certification from the court of appeals pursuant to 
Wis. Stat. (Rule) § 809.61 (1997-98).  Judgment-creditor Donald 
Rumage (Rumage) appeals from a decision of the circuit court for 
Racine County that found 1) the judgment-debtor's equity in his 
homestead did not exceed the amount sheltered by the homestead 
exemption statute and therefore Rumage's docketed judgment was 
not a lien on the homestead; and, 2) the judgment-debtor sold 
the homestead for fair market value.  The circuit court 
FILED 
 
JUN 16, 2000 
 
Cornelia G. Clark 
Clerk of Supreme Court 
Madison, WI 
 
 
 
 
 
No. 
No. 98-1276 
 
 
2 
concluded that Rumage's lien did not survive the sale of the 
homestead property.  
¶2 
Under Wisconsin law, a debtor can shelter up to 
$40,000 of homestead equity from the lien of a judgment 
creditor.  When the debtor's homestead equity is at or below the 
statutory maximum, it is "fully exempt."  The question certified 
by the court of appeals is whether a duly-docketed judgment lien 
attaches to the debtor's homestead property.  We restate this 
issue 
further 
as 
whether 
a 
properly 
docketed 
judgment 
constitutes a valid lien against fully exempt homestead property 
at the time of sale.  We hold that it does not.  We further 
conclude 
that 
the 
circuit 
court 
properly 
exercised 
its 
discretion in determining the fair market value of the debtor's 
homestead. 
Facts and Procedural History 
¶3 
The relevant facts are not in dispute.  In February 
1978 Reinier Kemeling (Kemeling) purchased residential property 
on Brook Road in Racine County, Wisconsin, for $178,500.  This 
property was Kemeling's homestead.  Kemeling owned and occupied 
this home when Donald Rumage (Rumage) obtained a judgment 
against Kemeling for $122,359.90.  Rumage docketed the judgment 
in Racine County on May 1, 1986.  At the time Rumage docketed 
his judgment Kemeling's home was already encumbered by a first 
and second mortgage.   
¶4 
In January 1989 the first mortgage holder commenced a 
foreclosure action against Kemeling.  On that same day, Kemeling 
filed a Chapter 7 bankruptcy proceeding.  On his bankruptcy 
No. 
No. 98-1276 
 
 
3 
schedules, Kemeling listed the Brook Road property as his 
homestead and claimed the property as exempt under Wis. Stat. 
§§ 815.20(1) and 990.01(14) (1989-90), the homestead exemption 
statutes set forth below.1  Kemeling reported in his bankruptcy 
                     
1 Wis. Stat. § 815.20  Homestead exemption definition.   
(1) An exempt homestead as defined in s. 990.01(14) 
selected by a resident owner and occupied by him or 
her shall be exempt from execution, from the lien of 
every judgment and from liability for the debts of the 
owner to the amount of $40,000, except mortgages, 
laborers', mechanics' and purchase money liens and 
taxes and except as otherwise provided.  The exemption 
shall not be impaired by temporary removal with the 
intention to reoccupy the premises as a homestead nor 
by the sale of the homestead, but shall extend to the 
proceeds derived from the sale to an amount not 
exceeding $40,000, while held, with the intention to 
procure another homestead with the proceeds, for 2 
years.  The exemption extends to land owned by husband 
and wife jointly or in common or as marital property, 
and when they reside in the same household may be 
claimed by either or may be divided in any proportion 
between them, but the exemption may not exceed $40,000 
for the household.  If the husband and wife fail to 
agree on the division of exemption, the exemption 
shall be divided between them by the court in which 
the first judgment was taken.  The exemption extends 
to the interest therein of tenants in common, having a 
homestead thereon with the consent of the cotenants, 
and to any estate less than a fee. 
 
Wis. Stat. § 990.01(14) Homestead Exemption.  "Exempt 
homestead" means the dwelling, including a building, 
condominium, 
mobile 
home, 
house 
trailer 
or 
cooperative, and so much of the land surrounding it as 
is reasonably necessary for its use as a home, but not 
less than 0.25 acre, if available, and not exceeding 
40 acres, within the limitation as to value under s. 
815.20, except as to liens attaching or rights of 
devisees 
or 
heirs 
of 
persons 
dying 
before 
the 
effective date of any increase of that limitation as 
to value. 
No. 
No. 98-1276 
 
 
4 
statements that his equity in this property did not exceed the 
$40,000 limit allowed by the Wisconsin statutes.  In addition, 
Kemeling listed Rumage as a creditor.   
¶5 
In February 1989 the Bankruptcy Court lifted the 
automatic stay against foreclosure action.  In March a judgment 
was entered in the foreclosure action ordering a sheriff's sale 
of the Brook Road property. 
¶6 
During the mortgage foreclosure redemption period, 
Kemeling voluntarily sold the Brook Road property to Gary L. 
Burmeister (Burmeister).  Burmeister purchased the property for 
$165,000, with the intent to resell it.  Burmeister's lender 
obtained an appraisal of the property estimating its market 
value to be $220,000 and, if certain improvements were made, up 
to 
$250,000. 
 
The 
title 
insurance 
commitment 
issued 
to 
Burmeister and his mortgagor cited as an exception the docketed 
judgment in favor of Rumage.   
¶7 
The Kemeling to Burmeister transaction closed on May 
31, 1989.  Kemeling applied the sale proceeds to the two 
mortgages, a title company obligation, and to payment of 
delinquent real estate taxes.  After these disbursements 
approximately $19,500 remained.  Kemeling retained this balance 
as his homestead exemption.   
¶8 
Twelve days after Burmeister purchased the Brook Road 
property, he entered into a contract to sell the property for 
                                                                  
 
The acreage provision in Wis. Stat. § 990.01(14) is not at 
issue in this case. 
No. 
No. 98-1276 
 
 
5 
$192,500 to Robert and Janet Gullberg (the Gullbergs).  This 
price was reached when Burmeister showed the Gullbergs the 
appraisal for $220,000.  The sale price split the difference 
between the $165,000 Burmeister paid for the property and the 
appraised amount.  This second sale closed on July 7, 1989.  On 
this same date, defendant-respondent mortgagees acquired their 
interest in the Brook Road property by conveyance from the 
Gullbergs.  We will refer to all the defendants collectively as 
"the Gullbergs." 
¶9 
Rumage was unaware of both private sales of the Brook 
Road property at the time they occurred and received none of the 
sale proceeds from either transaction. 
¶10 Rumage commenced an execution action upon the Brook 
Road property six years after the Gullbergs acquired the home.  
Rumage alleged that his lien remained a lien upon the Brook Road 
property from the date of entry forward.  He further alleged 
that his lien had a priority over the interests of the current 
owners, the Gullbergs.  The Gullbergs counterclaimed, demanding 
that Rumage release his judgment lien and requesting declaratory 
relief if the release was not forthcoming.  Subsequently, the 
Gullbergs moved for summary judgment, which was granted.   
¶11 In granting summary judgment, Racine County Circuit 
Court Judge Dennis J. Flynn concluded that judgment-debtor 
Kemeling's equity in the Brook Road property never exceeded the 
$40,000 homestead exemption and, therefore, Rumage's judgment 
did not become a lien on the Brook Road property.  As a result, 
Judge Flynn concluded that good title and fee simple was 
No. 
No. 98-1276 
 
 
6 
conveyed by Kemeling to Burmeister, and by Burmeister to the 
Gullbergs. 
¶12 Rumage appealed.  In an unpublished opinion, the court 
of appeals reversed the summary judgment order.  The court of 
appeals held that a material issue of fact existed as to whether 
the real estate transaction between Kemeling to Burmeister 
produced "fair value."  Rumage v. Gullberg, No. 96-2638, 
unpublished slip op. at 6-7 (Wis. Ct. App. Aug. 13, 1997).  This 
issue of fair value was critical, according to the court of 
appeals, because "[h]ad Kemeling received $192,000 for his 
homestead property—as did Burmeister one month later—Kemeling's 
equity interest in his homestead property would have exceeded 
the 
statutory 
limit 
and 
Rumage's 
lien 
would 
have 
been 
enforceable against such interest."  Id. at 7. 
¶13 In a footnote the court of appeals directed the 
parties to its decision EPF Corp. v. Pfost, 210 Wis. 2d 79, 563 
N.W.2d 905 (Ct. App. 1997).  Rumage, No. 96-2638, unpublished 
slip op. at 2 n.1 (Wis. Ct. App. Aug. 13, 1997).  In EPF, 
released after the initial circuit court proceedings in this 
case, the court of appeals held that a subsequent owner of 
homestead property may not raise a homestead exemption defense 
to a foreclosure action brought upon a judgment docketed against 
the prior homestead owner.  EPF, 210 Wis. 2d at 92-93.  Rumage 
had raised EPF as a defense to the Gullbergs' counterclaim, but 
did not pursue this defense at the summary judgment proceedings. 
The court of appeals stated that on remand the parties could 
No. 
No. 98-1276 
 
 
7 
debate the effect of EPF should Rumage choose to pursue the 
issue. 
¶14 On remand, Racine County Circuit Court Judge Stephen 
Simanek found that the sale price of $165,000 in the Kemeling to 
Burmeister transaction was fair market value.  As a result, the 
court concluded that Rumage's lien did not survive the sale. 
¶15 Rumage again appealed.  The court of appeals certified 
the appeal to this court. 
Standard of Review 
¶16 Our analysis requires interpretation of the homestead 
exemption 
statutes. 
 
Statutory 
interpretation 
presents 
a 
question of law that we review de novo.  McDonough v. Dept. of 
Workforce Development, 227 Wis. 2d 271, 277, 595 N.W.2d 686 
(1999).   
¶17 Our interpretation of the homestead statutes is guided 
by 
a 
well-established 
rule 
of 
construction 
stating 
that 
exemption laws are to be liberally construed.  North Side Bank 
v. Gentile, 129 Wis. 2d 208, 222, 385 N.W.2d 133 (1986); Home 
Owners' Loan Corp. v. Papara, 241 Wis. 112, 117, 3 N.W.2d 730 
(1942); Krueger v. Pierce, 37 Wis. 269, 271 (1875). "'The whole 
policy and spirit of the law so far as homesteads are concerned 
are to secure them to the debtor and his family.'"  Zimmer v. 
Pauley, 51 Wis. 282, 286, 8 N.W. 219 (1881) (quoting Krueger, 37 
Wis. at 271.).     
Analysis 
¶18 Rumage contends that a docketed judgment is a lien on 
homestead property owned by a judgment debtor; it is only the 
No. 
No. 98-1276 
 
 
8 
value of the homestead up to the statutory maximum of $40,000 
that is exempt from the creditor's claim.  Rumage argues that a 
judgment lien can be removed from the homestead's chain of title 
only through some judicial process such as a levy of execution,2 
or declaratory judgment.3  A private sale, according to Rumage, 
cannot 
extinguish 
a 
judgment 
lien. 
 
If 
these 
statutory 
procedures are not used, he argues, the docketed judgment 
remains a lien on the property.  
¶19 The Gullbergs contend that if the debtor's equity in 
the homestead property at the time of sale is at or below the 
$40,000 exempted by statute, then the homestead is fully exempt 
and the lien does not attach.  Wisconsin Stat. § 815.20(a) 
states 
in 
part 
that 
an 
exempt 
homestead 
"shall 
be 
exempt . . . from the lien of every judgment . . . ."  As a 
result, the Gullbergs argue that a fully exempt homestead can be 
transferred in a private sale unencumbered by the judgment lien.  
¶20 The litigants in this case advance the two primary, 
and conflicting, arguments regarding whether or not a judgment 
lien is attached to the homestead of a debtor.  As one 
commentator explains: 
 
The majority opinion seems to be that a judgment is 
not a lien against premises impressed with the 
                     
2  Wis. Stat. § 815.18(9) (1993-94); Wis. Stat. § 815.21 
(1993-94).   
All subsequent statutory references are to the 1993-94 
volume, unless noted otherwise. 
3 Wis. Stat. § 815.20(2); Wis. Stat. § 806.04.  
No. 
No. 98-1276 
 
 
9 
homestead character and subject to the homestead use 
and that an attachment or execution attempted to be 
levied thereon is absolutely void.  Other cases hold 
that the lien attaches, but it is dormant or in 
abeyance as long as the homestead continues.  The 
reason for the rule that a judgment is not a lien 
against land claimed as a homestead, is based upon the 
theory that a judgment is not a lien upon that which 
cannot be sold on execution. 
 
 
While 
both 
judgment 
liens 
and 
homestead 
exemptions are creatures of statute, the exemption, 
being the later expression of legislative intent and 
power, displaces the judgment lien, as both cannot 
stand together in their full extent.  The reason given 
for the rule that the judgment attaches but remains 
dormant while the homestead exists, is based upon the 
theory 
that 
the 
homestead 
exemption 
is 
not 
an 
assignable estate, but it is a mere possessory right, 
which is personal to the claimant and does not run 
with the land.  It can be readily seen that different 
consequences flow from these two lines of decisions.  
In the first class, the judgment debtor may sell the 
homestead and the purchaser will obtain a good title, 
free from encumbrance, so far as existing judgments 
for debt against the claimant of the homestead are 
concerned, unless homestead rights have been waived.  
On the other hand, while the property, so long as it 
is occupied as a homestead, is neither subject to a 
lien, levy, or sale when it ceases to be protected by 
the statute, it becomes liable to levy and sale under 
the first execution issued and levied, irrespective of 
whether the writ is issued on a senior or junior 
judgment.   
3 David A. Thomas, Thompson on Real Property, § 21.03(n), pp. 
220-23 (1994) (citing Wisconsin as a state that follows the 
majority rule)(footnotes omitted). 
¶21 We begin our analysis by reviewing the history of the 
homestead exemption law.  A properly docketed judgment lien is a 
lien on all nonexempt real property of the judgment debtor in 
the county where the judgment is rendered.  Wis. Stat. 
No. 
No. 98-1276 
 
 
10
§ 806.15(1).4  Certain homestead property is exempt property, 
held by a debtor free from a judgment creditor's claim.  This 
exemption is rooted in Wis. Const. art. 1, § 17,5 set forth 
below, and implemented through Wis. Stat. § 815.20.   
¶22 One hundred and fifty years ago, the homestead 
exemption statute differed from current law in several respects. 
 The 1849 statute defined the exemption solely in terms of 
acreage, not equity.  § 51, ch. 102 (Laws of 1849).6  As a 
                     
4 Wis. Stat. § 806.15(1)  
Every judgment properly docketed showing the judgment 
debtor's place of residence shall, for 10 years from 
the date of entry, be a lien on the real property, 
except the homestead mentioned in s. 815.20, in the 
county where docketed, of every person against whom it 
is rendered and docketed, which the person has at the 
time of docketing or which the person acquires 
thereafter within the 10-year period. 
 
This statute was amended by 1995 Act 224, a Revisor's 
Correction Bill.  This amendment does not affect our analysis. 
5 Wis. Const. art. I, § 17.  "Exemption of property of 
debtors.  The privilege of the debtor to enjoy the necessary 
comforts of life shall be recognized by wholesome laws, 
exempting a reasonable amount of property from seizure or sale 
for the payment of any debt or liability hereafter contracted." 
6 Section 51, ch. 102, Laws of 1849 states in part:  
A homestead, consisting of any quantity of land not 
exceeding forty acres, used for agricultural purposes, 
and 
the 
dwelling 
house 
thereon 
. . . or 
instead 
thereof, at the option of the owner, a quantity of 
land not exceeding in amount one-fourth of an acre, 
 . . . owned and occupied by any resident of the 
state, shall not be subject to forced sale on 
execution, or any other final process from a court, 
for any debt or liability contracted after the first 
day of January, in the year one thousand eight hundred 
and forty-nine.  
No. 
No. 98-1276 
 
 
11
result, the dollar value of the homestead exemption was not 
limited as it is today.  At that time, the statute sheltered the 
homestead property only from execution of a judgment lien.  Hoyt 
v. Howe, 3 Wis. 660, [*752], 666-67 [*759-60] (1854). If the 
judgment debtor conveyed his or her homestead or ceased to 
occupy it, then the judgment lien could be enforced.  Id.; 
Simmons v. Johnson, 14 Wis. 568 [*523], 572 [*527] (1861); Ohio 
Casualty Ins. Co. v. Holz & Holz, Inc., 24 Wis. 2d 587, 592, 128 
N.W.2d 330 (1964) (citing Hoyt, 3 Wis. 660 [*752]).  In Hoyt, 
the court stated: 
 
If it shall be thought necessary to give the debtor 
the power to sell his homestead and convey a good 
title to his grantee, free from the effect of 
judgments which may exist against him, the legislature 
is competent to give him this power . . . . 
Hoyt, 3 Wis. at 667, [*760].   
¶23 The legislature did just that. 
¶24 In response to Hoyt, the 1858 legislature amended the 
homestead exemption statute.  Ch. 137, Laws of 1858.7  Under the 
revised statute a judgment "did not become a lien on such 
portions of the premises as were used as and for a homestead, 
                                                                  
 
7 Section 1, ch. 137, Laws of 1858 states in part:  
The owner of a homestead under the laws of this state, 
may remove therefrom, or sell and convey the same, and 
such removal, or sale and conveyance, shall not render 
such homestead subject or liable to forced sale on 
execution or other final process hereafter issued on 
any judgment or decree of any court . . . against such 
owners, nor shall any judgment or decree of any such 
court be a lien on the homestead for any purpose 
whatever . . . .  
No. 
No. 98-1276 
 
 
12
because the statute expressly declares that the homestead shall 
be exempt from the lien of every judgment."  Martin v. C. 
Aultman & Co., 80 Wis. 150, 153, 49 N.W. 749 (1891).  See also 
Carver v. Lassallette, 57 Wis. 232, 239, 241, 15 N.W. 162 
(1883); Smith v. Zimmerman, 85 Wis. 542, 544, 55 N.W. 956 
(1893). Subsequent judicial opinions affirmed that the 1858 
amendment changed the rule established in Hoyt.  Seamans v. 
Carter, 15 Wis. 606 [*548], 608-09 [*549] (1862); In re Phelan, 
16 Wis. 79, [*76], 83, [*80] (1862); Baltimore Annual Conference 
v. Schell, 17 Wis. 317, [*308], 322-23, [*313] (1863); Smith v. 
Zimmerman, 85 Wis. 542, 544, 55 N.W. 956 (1893) (at the time a 
judgment was docketed the property at issue was homestead 
property and "while it is an apparent lien it is in reality no 
lien or charge thereon.")  
¶25 At the dawn of the twentieth century, a $5,000 value 
limitation was added to the homestead exemption.  Ch. 269 Laws 
of 1901.  Subsequently, the value limitation was gradually 
increased to its present limit of $40,000.  Wis. Stat. § 815.20. 
 Other than increasing the value limit, the legislature did not 
change the homestead law during the intervening years in any way 
that affects our analysis in this case.  Throughout the decades, 
courts continued to find that a judgment is not a lien on 
homestead property when the debtor's equity is less than maximum 
exempted by statute.  Kopf v. Engelke, 240 Wis. 10, 15, 1 N.W.2d 
760 (1942); Winter v. O'Neill, 241 Wis. 280, 285, 5 N.W.2d 809 
(1942).  The development of the law we outline here was 
summarized in Ohio Casualty: 
No. 
No. 98-1276 
 
 
13
 
Prior to 1858 the Wisconsin homestead exemption 
was only available to prevent an execution sale.  
Judgments of courts of record were liens upon the 
homestead.  If the judgment debtor conveyed his 
homestead the purchaser took subject to the lien of 
the judgment.  Under the present statutes . . . no 
general judgment is a lien upon the exempt homestead. 
Ohio Casualty, 24 Wis. 2d at 592 (internal citations omitted).  
The statute in its present form states that an exempt homestead 
"shall be exempt from execution, from the lien of every judgment 
and from liability for the debts of the owner to the amount of 
$40,000."  Wis. Stat. § 815.20   
¶26 In its certification of this case, the court of 
appeals questioned the description of the law used in Ohio 
Casualty.  "Section 806.15(1), Stats., does not state that a 
judgment lien is not a lien on homestead property.  Rather, the 
statute says that the homestead property is exempt from 
execution under § 815.20, Stats.  Section 815.20(1) in turn caps 
the homestead exemption in a sale situation at $40,000."  Rumage 
v. Gullberg, No. 98-1276, unpublished slip op. at 5-6 (Wis. Ct. 
App. May 5, 1999).  The court of appeals posited that when Wis. 
Stat. § 806.15(1) and Wis. Stat. § 815.20(1) are read together, 
a docketed judgment lien attaches to homestead property, 
although it cannot be enforced to the extent that the homestead 
exemption applies.  "If the language of the supreme court cases 
is literally applied, a judgment creditor is deprived of the 
benefits of a homestead sale which produces proceeds in excess 
of the exemption."  Id. at 6.  Rumage also asserts that it is 
No. 
No. 98-1276 
 
 
14
not the homestead that is exempt from the lien of every 
judgment, but the value to the amount of $40,000. 
¶27 The initial, and critical, step taken when a judgment 
lien is asserted against homestead property is to determine if 
the debtor has equity in the homestead in excess of the amount 
sheltered by the homestead exemption.  "A judgment lien attaches 
generally only to the judgment debtor's interest in the land."  
Milton R. Friedman, Contracts and Conveyances of Real Property, 
§ 4.8(e) p. 412 (5th ed. 1991) (footnote omitted).  The value of 
the exemption to the debtor is based upon the debtor's equity in 
the homestead.8  Eloff v. Riesch, 14 Wis. 2d 519, 523-24, 111 
N.W.2d 578 (1961) (citing Northwestern Securities Co. v. Nelson, 
191 Wis. 580, 583, 211 N.W.2d 798 (1927)).  If the debtor's 
equity in the homestead exceeds the amount sheltered by statute, 
there is surplus equity and the homestead is "partially exempt." 
 Wis. Stat. § 815.18(9).9  We agree with the court of appeals and 
Rumage that when a homestead is partially exempt, a docketed 
                     
8 Wis. Stat. § 815.18(2)(g): "'Equity' means the fair market 
value of the debtor's interest in property, less the valid liens 
on that property."  
9 Wis. Stat. § 815.18(9): Partially Exempt Property.   
In case of property that is partially exempt, the 
debtor . . . is entitled to claim the exempt portion 
of the property.  The exempt portion claimed shall be 
set apart for the debtor, or for the debtor's 
dependents, and the nonexempt portion shall be subject 
to a creditor's claim.  If partially exempt property 
is indivisible, the property may be sold and the 
exempt value of the property paid to the debtor or the 
debtor's dependents.  
 
No. 
No. 98-1276 
 
 
15
judgment is a lien upon the debtor's equity in excess of the 
amount sheltered by Wis. Stat. § 815.20.  When the partially 
exempt property is sold this defect must be corrected in order 
for the seller to give clear title.  
¶28 However, if the debtor has less than $40,000 in 
equity, then the homestead is fully exempt.  The debtor 
possesses no equity interest upon which the judgment can be a 
lien.  As a result, there is no lien, and accordingly a debtor-
seller can give clear title to the purchaser of fully exempt 
homestead property.  "A judgment that becomes unenforceable 
ceases to be an encumbrance."  Milton R. Friedman, Contracts and 
Conveyances 
of 
Real 
Property, 
§ 4.8(e) 
p. 
411 
(5th 
ed. 
1991)(footnote omitted).  A fully exempt homestead is free of 
the judgment lien when the property is lawfully conveyed.  See 
Eloff, 14 Wis. at 524-26; Kopf, 240 Wis. at 15.  
¶29 Our analysis of the operation of the homestead 
statutes is based upon our examination of the language of the 
statutes and decades of cases interpreting this exemption.  From 
1858 through to the present, only EPF conflicts with this 
reasoning.  In EPF, the court of appeals held that a judgment 
creditor's lien attached to homestead property despite the fact 
that the property was fully exempt when sold by the judgment 
debtor.  EPF, 210 Wis. 2d at 92-93.  We overrule EPF to the 
extent it conflicts with our conclusions in this case.  The flaw 
in EPF is it concluded that a docketed judgment is a lien on 
fully exempt homestead property.  It is not.   
No. 
No. 98-1276 
 
 
16
¶30 Having set forth the fundamental legal principles 
applicable to the resolution of this case, we turn to address 
the specific arguments presented by the parties. 
¶31 Rumage asserts that when the legislature capped the 
value of the homestead exemption by adding a maximum dollar 
amount to the statute, the nature of the exemption changed.  The 
judgment, according to Rumage, is now a lien on the home, 
although the homeowner keeps his sheltered value.  However, this 
argument ignores the initial question:  does the debtor possess 
any nonexempt equity in his homestead?  If the answer to this 
question is no, then the judgment is not a lien on the homestead 
property.  The addition of the dollar amount to the exemption 
statute merely raised to the forefront the question of whether a 
debtor's homestead is partially exempt or fully exempt.  As we 
have already stated, in the many intervening years since the 
dollar limitation on the value of the homestead exemption was 
added, our cases continued to state that a judgment is not a 
lien on fully exempt homestead property.  Ohio Casualty, 24 
Wis. 2d at 592. 
¶32 Rumage also argues that the existence of statutory 
procedures for determining a debtor's equity in homestead 
necessarily means that a judgment lien attaches to all homestead 
property and remains on the property until removed by judicial 
action. Rumage contends that a private sale cannot extinguish a 
judgment lien and therefore a purchaser in a private sale takes 
the property subject to the lien under the rule of Carefree 
Homes v. Production Credit Ass'n., 81 Wis. 2d 541, 260 N.W.2d 
No. 
No. 98-1276 
 
 
17
759 (1978); Eloff, 14 Wis. 2d 519; R.F. Gehrke v. Mahl, 237 Wis. 
414, 297 N.W. 373 (1941).  We disagree. 
¶33 We first examine Wis. Stat. § 815.20(2), set forth 
below.10  This statute provides that an owner of fully exempt 
homestead property may utilize the procedures for declaratory 
judgment in Wis. Stat. § 806.04 if a release is demanded but not 
received from a judgment creditor.  The statute protects the 
homestead exemption by giving the homeowner a tool to compel a 
release from a creditor:  the debtor can obtain a declaratory 
judgment.   
¶34 A suggested procedure for releasing a homestead is set 
forth in James J. Vance, Titles to Real Estate, University of 
Wisconsin Law School Continuing Education and Outreach (1998 
Revised Ed.).  Vance suggests that the seller prepare a payout 
schedule showing sale price, sale expenses, the homestead 
exemption, judgments and liens and a proposed distribution of 
cash proceeds to persons with the highest priority.  Id. at 
                     
10 Wis. Stat. § 815.20(2) (as amended by 1993 Wis. Act 486, 
§ 188): 
Any owner of an exempt homestead against whom a 
judgment has been rendered and docketed, and any heir, 
devisee or grantee of such owner, or any mortgagee of 
such homestead, may proceed under s. 806.04 for 
declaratory relief if such homestead is less than 
$40,000 in value and the owner of such judgment shall 
fail, 
for 
10 
days 
after 
demand, 
to 
execute 
a 
recordable release of such homestead from the judgment 
owner's judgment lien. 
 
This section was subsequently amended by 1995 Wis. Act 224, 
§ 119, a Revisor's Correction Bill.  The amendment does not 
affect our analysis. 
No. 
No. 98-1276 
 
 
18
§ 13.11-12. 
 
"When 
the 
homestead 
is 
involved, 
the 
schedule . . . would propose to pay off judgments if there are 
funds in excess of closing costs, mortgages, construction liens, 
and the exemption."  Id. at § 13.12.  The proposed payout 
schedule is sent to all lien holders.  Id. at § 13.11.  A 
release is demanded pursuant to Wis. Stat. § 815.20(2) and if 
the creditor does not execute a recordable release the owner can 
proceed under Wis. Stat. § 806.04 for declaratory relief.  "This 
provision is extremely effective because the judgment holder is 
charged for all expenses in the court proceeding."  Id. at 
§ 13.12.   
¶35 Obtaining a recordable release would be a better 
practice.  However, this does not detract from our conclusion 
that the seller of fully exempt homestead property gives the 
buyer clear title.  
¶36 Additionally, our opinion in this case does not change 
a judgment creditor's right to pursue a levy of execution.  The 
creditor must establish an enforceable lien, which in turn 
requires that the homestead be partially exempt.  
¶37 We do not agree with Rumage's contention that the 
value of the debtor's equity can only be determined through a 
judicial proceeding.  Wisconsin Stat. § 815.18(7) provides that 
the value of any property subject to exemption "shall be 
determined by agreement of the parties or by a commercially 
reasonable manner."  The price paid in a commercially reasonable 
private sale can serve as evidence of fair market value and the 
debtor's equity at the time of sale.  Kopf, 240 Wis. at 15; 
No. 
No. 98-1276 
 
 
19
Eloff, 14 Wis. 2d at 523 (where the court considers "whether 
Edward's interest in the property was exempt from the lien of 
Gebhard's judgment at the time he conveyed it to Rosemary.").  
Rumage has presented no persuasive arguments that a private 
arms-length sale, which results in fair market value being paid 
for the real estate, is not a "commercially reasonable" method 
to determine the judgment debtor's equity in the homestead.  
Although Rumage cites Carefree and Gehrke, these cases did not 
involve homestead property.  This is a critical distinction 
because Wis. Stat. § 806.15(1) provides that a properly docketed 
judgment is a lien on all real property except homestead 
property that is exempt from execution.  In this case the 
property at issue was undisputedly homestead property.   
¶38 At oral argument, Rumage asserted that he had no 
notice of either the Kemeling to Burmeister transaction or the 
Burmeister to Gullberg sale and therefore this was not a fair 
process.  However, at no time prior to these sales was Rumage 
deprived of his right to pursue a forced sale on the Brook Road 
property.  That is the protection afforded by the law to Rumage.  
¶39 Next, Rumage points to our statement in Carefree that 
allowing a private sale to extinguish the lien will endorse a 
new type of foreclosure where the debtor will unilaterally 
determine the time and manner in which real estate is sold, 
depriving junior lien holders of the benefits of statutory 
procedures in a judicial proceeding.  Carefree, 81 Wis. 2d at 
551.  In Carefree, the debtors sold a parcel of land encumbered 
with a lien.  Id. at 543.  As we previously noted, the debtors 
No. 
No. 98-1276 
 
 
20
in Carefree were not selling homestead property and therefore 
the court did not have to undertake the initial analysis of 
whether the property was exempt from the judgment creditor's 
lien.  Because a valid lien was in effect the court stated that 
a private sale could not make the lien simply disappear.  Our 
holding here does not change this rule.  A private sale of a 
homestead does not make an enforceable lien on nonexempt 
property disappear.  
¶40 In Eloff, cited by Rumage, the court stated the 
general rule, that "[a] judgment lien properly docketed is 
superior to a subsequent conveyance of the debtor's interest in 
real estate."  Eloff, 14 Wis. 2d at 523.  The Eloff court said 
that the necessary next step is to consider whether the judgment 
debtor's interest in the homestead property was exempt from the 
lien at the time it was conveyed.  Id.  The court concluded that 
the debtor's homestead equity was less than the statutory 
maximum and entirely exempt from the lien of the judgment 
creditor at the time the debtor conveyed his interest.  Id. at 
527.  The court's analysis affirmed that the creditor's judgment 
was not a lien on the property and cloud was removed from the 
title.  Id. at 521, 527.  The holding in Eloff supports our 
conclusion in this case. 
¶41 Whether a debtor's homestead equity is determined via 
a private sale, levy execution, or declaratory judgment, the 
issue to be resolved is whether the judgment is a lien on the 
homestead.  The answer to this question depends upon whether the 
debtor's equity is greater than the amount sheltered by statute. 
No. 
No. 98-1276 
 
 
21
 This determination depends upon ascertaining the fair market 
value of the homestead, minus any amount due to unexempt 
creditors.  If the debtor's equity is greater than the statutory 
maximum, the judgment is a lien on the surplus.  If the debtor's 
homestead equity is fully exempt there is no lien.  As a result, 
there is no encumbrance on the property at that time.  
¶42 When a judgment debtor sells his homestead in a 
private sale, the value of the property at the time of transfer 
may establish whether the homestead is fully exempt.  Kopf, 240 
Wis. at 15.11  Rumage contends that the circuit court judge erred 
as a matter of law in the criteria he used to determine whether 
the sale price in the Kemeling to Burmeister transaction was for 
fair market value.  We disagree with this argument.   
¶43 Whether the sale by Kemeling to Burmeister was for 
fair market value is a question of fact.  A question of fact 
decided by the circuit court judge is sustained unless it is 
clearly erroneous.  Wis. Stat. § 805.17(2).  When more then one 
inference can be drawn from the evidence, the reviewing court 
must accept the inference drawn by the finder of fact."  Elkhorn 
Sch. Dist. v. East Troy Sch. Dist., 110 Wis. 2d 1, 6, 327 N.W.2d 
                     
11 "Deducting the $5,000 exemption, the amount of the 
mortgage on the property, the amount of unpaid taxes clearly 
demonstrates that at the time of the transfer, John's equity in 
the premises was of little or no value, and it was that and that 
only that was subject to the lien of plaintiff's judgment."  
Kopf v. Engelke, 240 Wis. 10, 15, 1 N.W.2d 760 (1942)(emphasis 
supplied).  
No. 
No. 98-1276 
 
 
22
206 (Ct. App. 1982); Onalaska Elec. Heating, Inc. v. Schaller, 
94 Wis. 2d 493, 501, 288 N.W.2d 829 (1980). 
¶44 Rumage contends that the circuit court erroneously 
based its decision on fair market value upon standards for 
establishing "fair value" in a foreclosure sale.  In addition, 
Rumage contends that the judge erroneously applied foreclose 
sale law by accepting the price paid by a speculator to 
determine value.  First Wis. Nat'l Bank of Oshkosh, v. KSW Inv., 
71 Wis. 2d 359, 238 N.W.2d 123 (1976).12   
¶45 Judge Simanek conducted a hearing on the issue of the 
value of the Brook Road property on March 31, 1998.  Upon motion 
for reconsideration he conducted a second hearing on this same 
issue on April 29, 1998.  At the hearing upon motion for 
reconsideration, there was discussion about the distinction 
between "fair value" and "fair market value."  The record shows 
Judge Simanek's decision was founded upon the idea that an arms-
length transaction may demonstrate fair market value, although 
he cited several foreclosure cases for purposes of analogy.  The 
judge stated that fair market value is what a willing buyer 
under no compulsion to purchase will pay to a willing seller who 
is not compelled to sell.  Judge Simanek found no evidence of 
collusion or fraud between Kemeling and Burmeister.  He 
                     
12  First Wis. Nat'l Bank of Oshkosh, v. KSW Inv., 71 
Wis. 2d 359, 368, 238 N.W.2d 123 (1976):  "In determining the 
fair value . . . the trial court should have considered the 
price which a person willing and able to buy the property would 
reasonably pay for it, not for purposes of speculation, but for 
that use to which it has been or reasonably may be put." 
No. 
No. 98-1276 
 
 
23
considered a variety of parameters including the property's 
assessed value, noting that the Town of Caledonia assesses as a 
percentage of what it estimates to be the property's fair market 
value.  The judge also considered the appraisal estimate 
obtained by Burmeister's lender valuing the Brook Road property 
at $220,000.  The judge noted that the property sold for almost 
83 percent of its assessed value at a time when there was an 
ongoing 
bankruptcy 
and 
foreclosure 
proceeding. 
 
Such 
proceedings, noted the judge, may influence what a seller is 
willing to accept as fair market value.  In sum, after hearing 
all the evidence and arguments, the circuit court judge 
determined that the $165,000 sale price was for fair market 
value.  We cannot conclude that this decision is erroneous.13 
¶46 Finally, Rumage contends that the Gullbergs are not 
entitled to nunc pro tunc (now for then) declaratory relief as 
of May 31, 1989.  However, we conclude that the relevant time of 
inquiry is the time of transfer by the judgment debtor.  Wis. 
Stat. § 815.18(7); Kopf, 240 Wis. at 15.  Section 815.18(7) 
expressly permits the valuation of a homestead exemption to be 
made in any reasonable manner.  We have concluded that the 
private sale was an appropriate means to determine value under 
                     
13 Because we conclude that the judgment lien did not attach 
to Kemeling's fully exempt homestead property, we need not 
examine several additional arguments offered by the parties, 
including Rumage's argument on whether a homestead exemption 
defense runs with the land, and questions relating to equitable 
subrogation.  In addition, we need not address the Gullbergs' 
assertion that Rumage's claim is barred by laches.   
No. 
No. 98-1276 
 
 
24
this statute and therefore the time of sale is the date to which 
declaratory relief shall reach nunc pro tunc.  Rumage attempts 
to distinguish Kopf by pointing out that this case did not 
involve a judgment lien.  However, Kopf demonstrates that a 
debtor's equity in a homestead is calculated at the time of 
transfer.  Kopf, 240 Wis. at 15.  
¶47 In sum, we conclude that a judgment lien is not a 
valid lien against fully exempt homestead property.  In 
addition, we conclude that the circuit court did not err in 
concluding that the sale of the property at issue in this case 
was for fair market value. 
By the Court.—The judgment of the circuit court is 
affirmed. 
 
 
 
 
 
 
 
 
No. 
No. 98-1276 
 
 
1