If my husband purchases a home in another state, am I responsible if I sign the homestead waiver?
Full Question:
Answer:
In Illinois, an individual who occupies real estate as a residence is entitled to a homestead exemption. The home cannot be sold to satisfy a lien if the amount of the equity interest in the home is less than the exemption amount. The exemption is $15,000 for a single person, and $30,000 for a married couple who both own the residence.
This must be compared to the debtor’s equity interest in the property. A debtor’s equity interest in real estate is figured by subtracting amounts owed on a mortgage (or other liens on the house) from the present value of the property. If that is less than the exemption, there cannot be a forced sale of the house to satisfy the lien.
For example, if a home is worth $85,000, but the sum of $75,000 is owed on the mortgage, the debtor’s equity interest is $10,000. If the debtor is married, and both spouses own and live in the residence, they have a $30,000 exemption. Because the debtor’s equity interest in the real estate is less than the exemption, the home cannot be sold to pay their debt. However, if the amount of the equity interest is greater than the exemption amount, then the home might possibly be sold.
Holding a homestead exemption right does not expose that spouse to the liability for repayment of any mortgage or other encumbrance on the property. Spouses are often asked to sign a waiver of their homestead rights so that the lender can pursue foreclosure on the home if payments are not made on the mortgage. A waiver of homestead exemption is usually part of a mortgage that allows a lender to foreclose if a payment is missed. That does not affect rights between husband and wife.
Illinois law exempts a home from being seized as security for a loan which has gone sour. Unless, of course, the borrowers have signed an waiver. Because the exemption would prevent the house from being used as security for the loan made to buy the house in the first place, lenders will not make a loan unless the homestead right is waived.
