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Homestead Rights in Illinois

The word “homestead” might bring to mind how the U.S. western territory was settled, by allowing any American to put in a claim on up to 160 acres of federal land. The only price was a small filing fee. A lot has changed since President Abraham Lincoln signed the Homestead Act in 1862.

What Does Homestead Mean?

That act was repealed in 1976 and homestead now has a modern-day definition. Illinois says that a homestead is owned and occupied by the person as their home. It includes surrounding property that is not separated from the home by someone else’s property.

A homestead exemption removes part of its value from taxation, allowing a homeowner to protect the value of their principal residence from creditors and property taxes. Homestead rights are designed to help you avoid becoming homeless just because you cannot pay your debt. Currently, anyone who owns and occupies a home as a primary residence can exempt $15,000 worth of real estate from a creditor’s collection efforts. If both spouses appear on the title, you can pool your homestead rights and protect $30,000 value in your home.

A creditor cannot sell your property to satisfy a court judgment, not even in a bankruptcy, if the total equity of your home does not exceed $15,000 or $30,000 for joint property. If you have more equity in your home than the exemption amount, your property can be seized and sold.

A homestead exemption does not protect against foreclosure if the homeowner defaults on their mortgage. If you go into foreclosure, the first $15,000/ $30,000 of the sale proceeds belongs to you.

When one spouse dies, the surviving spouse is also protected.

Is the House a Marital Asset?

Having only one spouse’s name on a mortgage isn’t uncommon, but the name on the deed or mortgage is not usually a factor in determining whether the house is marital property.

In Illinois, an asset is usually considered marital property if either:

  • It was acquired during the marriage by either spouse
  • Both spouses use their wages to help pay the monthly mortgage

The home would probably be considered non-marital property if you bought a house and paid off the mortgage before you got married. If one spouse buys the house prior to marriage but the other spouse moves in and helps with the payments, the portion of the home paid off before marriage could be separated from the portion paid during the marriage, effectively leaving part of the house a non-marital asset.

What Happens to the House in a Divorce?

To be clear, Illinois’ homestead laws do not prevent the sale or allocation of a home during a divorce proceeding. This state is an equitable division state, not a community property state. In a community property state, the value of all marital assets is divided equally. That’s not the case here.

A court’s property division decision is based on many factors and could allocate all the marital property, including the home, to one spouse. Some of the considerations taken by the court include the length of the marriage, each spouse’s economic circumstance, the value of the property, and each spouse’s contribution to the house (including caring for children and the home).

Rights of the Non-Title Holding Spouse

Only the spouse who appears on the title has the right to claim a homestead interest. The law does, however, protect one spouse from being evicted by the other. If the spouse on the title doesn’t want to live with their spouse during divorce negotiations, they must find them suitable housing until they are no longer married, thanks in part to the Rights of Married Persons Act and the Conveyances Act.

In short, the non-titleholding spouse has a right of occupancy, by virtue of their marriage and residence on the property.

Homestead Waivers in Illinois

Illinois law also requires the consent of both spouses for waiving homestead rights. So, even if you don’t own the homestead property, you’ll still need to sign a waiver of homestead rights to enable your spouse to mortgage the home. This is true even during marital separation, but an ex-spouse signature is not needed after a divorce is finalized.

If the property was conveyed to the ex-spouse during the marriage, a quit-claim deed from the ex-spouse is required unless the judgment of dissolution of marriage gives the title free of any rights of the ex-spouse, including homestead.

A general comment about waivers: Few banks will lend money for a mortgage unless you sign a homestead waiver. The banks require a homestead waiver (establishing you have no homestead exemption claim) so the mortgage company can recoup all its losses in case of foreclosure. When waiving your homestead exemption, you are giving up your right to the $15,000 or $30,000 you would have received in a foreclosure sale with a homestead exemption.

Fair Divorce Settlements

Depending on the financial, family, and social situations of a divorcing couple, the home may be the biggest point of contention. At the Law Offices of Jonathan Merel, P.C., we believe having a good roof over your head helps provide some peace of mind, even when going through a divorce. We will fight for your rights to the house and other marital assets so divorce doesn’t leave you financially abandoned.

If you are considering divorce, talk to one of our experienced lawyers in a phone consultation.


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