In America, the ability to own a home is part of the American Dream. In furtherance of this, there are numerous laws which encourage home ownership such as the mortgage interest deduction and the concept of the homestead exemption.
What Is A Homestead in Illinois?
A homestead is a building or collection of buildings where people actually live. “Homestead is a freehold estate in land, the purpose of which is ‘to insure to the family the possession and enjoyment of a home ” Willard v. Northwest National Bank of Chicago, 137 Ill. App. 3d 255, 264 (1985)
Labelling a house a homestead provides “a shelter beyond the reach of his improvidence or financial misfortune.” People v. One Residence Located at 1403 East Parham Street, 251 Ill. App. 3d 198, 201 (1993)
Homestead In Illinois When You Are Married
In Illinois, labelling a house a homestead, keeps one member of the couple from evicting the other party from the home. “Neither the husband nor wife can remove the other or their children from their homestead without the consent of the other, unless the owner of the property shall, in good faith, provide another homestead suitable to the condition in life of the family; and if he abandons her, she is entitled to the custody of their minor children, unless a court of competent jurisdiction, upon application for that purpose, shall otherwise direct.” 750 ILCS 65/16
In Illinois, “where a homestead exists neither can change the residence of the other from that homestead without such other’s consent or unless another suitable homestead is provided.” Brod v. Brod, 390 Ill. 312, 324 (Ill. 1945)
The concept of the homestead means that the married person who owns a property cannot simply put their spouse out on the street. The married person who owns property must find their spouse suitable housing…at least until they’re no longer married and are, in fact, divorced.
“No deed or other instrument shall be construed as releasing or waiving the right of homestead, unless the same shall contain a clause expressly releasing or waiving such right. And no release or waiver of the right of homestead by the husband or wife shall bind the other spouse unless such other spouse joins in such release or waiver.” 765 ILCS 5/27
Homestead and Divorce In Illinois
All these homestead protections only apply while the parties are married. The homestead protections cannot apply to prevent the sale or allocation of a home during an Illinois divorce proceeding.
“In case of a dissolution of marriage, the court granting the dissolution of marriage may dispose of the homestead estate according to the equities of the case.” 735 ILCS 5/12-905
Homestead and Debt In Illinois
“Like many states, Illinois provides its citizens an exemption in proceeds from the sale of a homestead.” In re Stewart, 452 BR 726 – Bankr. Court, CD Illinois 2011
If a house is getting foreclosed on, a homeowner always gets to keep $15,000 worth of the equity in their home. Presumably, the house will be sold at a foreclosure auction and the proceeds will pay off the mortgage, any other debts….and give the previous owner $15,000 so they can get a new house. In theory, this keeps people from becoming homeless.
“Every individual is entitled to an estate of homestead to the extent in value of $15,000 of his or her interest in a farm or lot of land and buildings thereon, a condominium, or personal property, owned or rightly possessed by lease or otherwise and occupied by him or her as a residence, or in a cooperative that owns property that the individual uses as a residence. That homestead and all right in and title to that homestead is exempt from attachment, judgment, levy, or judgment sale for the payment of his or her debts or other purposes… If 2 or more individuals own property that is exempt as a homestead, the value of the exemption of each individual may not exceed his or her proportionate share of $30,000 based upon percentage of ownership.” 735 ILCS 5/12-901
If the parties are married and they own the house together, they get to keep $30,000 of the equity in the house via the homestead exemption. To keep $30,000, the married couple must hold the property jointly. Both members of the couple must be on the deed in order to take advantage of Illinois’ homestead exemption.
“Illinois case law has consistently required a party to have a formalized property interest to claim a Homestead Exemption.” In Re: Belcher, 551 F. 3d 688 (7th Cir.) 2008
“[A] spouse who is not on title to property, but is the spouse of the titleholder and maintains the property as her primary place of residence, cannot claim the homestead exemption under section 12-901 of the Code.” GMAC Mortgage, LLC v. Arrigo, 2014 IL App (2d) 130938
The homestead exemption can still be claimed by a spouse after a title-holding spouse dies or disappears. “Such exemption shall continue after the death of such individual, for the benefit of the spouse surviving, so long as he or she continues to occupy such homestead, and of the children until the youngest child becomes 18 years of age; and in case the spouse deserts his or her family, the exemption shall continue in favor of the one occupying the premises as a residence.” 735 ILCS 5/12-902
If property tax or debts to contractors remain, the homestead exemption will not apply. “No property shall, by virtue of [of this homestead exemption statute] be exempt from sale for nonpayment of taxes or assessments, or for a debt or liability incurred for the purchase or improvement thereof” 735 ILCS 5/12-903
Owning a house is a big deal. You need to know your rights as a homeowner whether you’re single, married or about to be divorced. To learn more about your rights as an Illinois homeowner as you begin divorce proceedings, contact my Chicago family law firm to schedule a free consultation.