We are in the process of switching loan origination systems and have run into an issue with how to document a non-owner spouse waiving their homestead exemption rights. Our new mortgage documentation vendor does not support adding homestead waiver language to the mortgage and is suggesting that we edit the mortgage after the fact to include this language. What language does Illinois law require for waiving homestead exemption rights, and how should this be properly documented?

Illinois law does not require specific language to be used in a homestead exemption waiver, but the Conveyances Act does provide that a grantor may waive the homestead exemption right in a mortgage or deed by inserting “in substance the following words, ‘hereby releasing and waiving all rights under and by virtue of the homestead exemption laws of this State.’”

The Conveyances Act also provides that an instrument “shall not 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.”

As an example, the Fannie Mae/Freddie Mac Uniform Instrument for single family homes in Illinois includes the following clause: “Waiver of Homestead. In accordance with Illinois law, the Borrower hereby releases and waives all rights under and by virtue of the Illinois homestead exemption laws.” We recommend working with your bank counsel regarding the appropriate homestead waiver language for a non-owner spouse.

Additionally, we do not recommend editing the mortgage documents provided by your loan origination system without considering the possibility that such edits could void any warranties provided with those documents. For example, one alternative approach would be to work with bank counsel to create an addendum to the mortgage documents to be signed by the borrower and their spouse (or party to a civil union, who also would have to sign the homestead waiver).

For resources related to our guidance, please see:

Conveyances Act, 765 ILCS 5/11(a) (“Mortgages of lands may be substantially in the following form: The Mortgagor (here insert name or names), mortgages and warrants to (here insert name or names of mortgagee or mortgagees), to secure the payment of (here recite the nature and amount of indebtedness, showing when due and the rate of interest, and whether secured by note or otherwise), the following described real estate (here insert description thereof), situated in the County of …., in the State of Illinois. Dated (insert date). (signature of mortgagor or mortgagors) . . . When the grantor or grantors in such deed or mortgage for the conveyance of any real estate desires to release or waive his, her or their homestead rights therein, they or either of them may release or waive the same by inserting in the form of deed or mortgage (as the case may be), provided in Sections 9, 10 and 11, after the words ‘State of Illinois,’ in substance the following words, ‘hereby releasing and waiving all rights under and by virtue of the homestead exemption laws of this State.’”)

Illinois Code of Civil Procedure, 735 ILCS 5/12-901 (“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, . . . 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 and from the laws of conveyance, descent, and legacy, except as provided in this Code or in Section 20-6 of the Probate Act of 1975. This Section is not applicable between joint tenants or tenants in common but it is applicable as to any creditors of those persons. 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.”)

Conveyances Act, 765 ILCS 5/27 (“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.”)

Illinois Code of Civil Procedure, 735 ILCS 5/12-904 (“No release, waiver or conveyance of the estate so exempted shall be valid, unless the same is in writing, signed by the individual and his or her spouse, if he or she have one . . . In any case where such release, waiver or conveyance is taken by way of mortgage or security, the same shall only be operative as to such specific release, waiver or conveyance; and when the same includes different pieces of land, or the homestead is of greater value than $15,000, the other lands shall first be sold before resorting to the homestead, and in case of the sale of such homestead, if any balance remains after the payment of the debt and costs, such balance shall, to the extent of $15,000 be exempt, and be applied upon such homestead exemption in the manner provided by law.”)

Fannie Mae/Freddie Mac Uniform Instrument, Illinois – Single Family (“Waiver of Homestead. In accordance with Illinois law, the Borrower hereby releases and waives all rights under and by virtue of the Illinois homestead exemption laws.”)

Illinois Religious Freedom Protection and Civil Union Act, 750 ILCS 75/20 (“A party to a civil union is entitled to the same legal obligations, responsibilities, protections, and benefits as are afforded or recognized by the law of Illinois to spouses, whether they derive from statute, administrative rule, policy, common law, or any other source of civil or criminal law.”)