Legal Question in Real Estate Law in Illinois

The note and mortgage would NOT change based on what you describe. This would require a refinance or pay off of the loan. If one spouse conveys his or her interest to the other, the result would be, one spouse would own the property, but both would owe the money. Not a good situation for the non-owner spouse.

Merely removing a person's name from the ownership of a property does not change who is liable on the underlying obligation. The mortgage makes the property collateral for the loan. The loan still needs to be repaid by whoever took on the obligation.

Changing ownership does not change the obligation to the lender. The now former owner would still be on the hook for the loan.

Presuming the remaining owner continues to pay, that may not present an issue as far as being forced to come up with the money, but it is a bad situation in which to be. Likely, the term of the loan extends out years, which means all kinds of things can happen in the interim as far as the other owner paying and the outstanding balance will come into play for any future loan applications. In other words, the now former owner may have trouble qualifying to get credit, particularly for bigger ticket items such as another house or a car.

It would be best if the person remaining would refinance or have the loan modified, but if that is difficult, advice should be obtained concerning establishing a viable plan going forward.