Does eating lawful food in a usurped house and having sexual relations with one's wife therein result in the children being illegitimate, and what are the implications of that?

The aforementioned branches of reasoning—that the body grew from unlawful means, that intercourse is unlawful, and that the children are unlawful—are incorrect and false. However, you bear the sin of residing in a usurped house, given your knowledge of the usurpation and your ability to live elsewhere. Al-Marwazi narrated from Imam Ahmad regarding a man whose parents live in a house with usurped bricks: "He should not enter upon his parents, because his entry constitutes an act of disposal concerning the usurped bricks." Your father must return the property to the one from whom he usurped it, and he must guarantee its usufruct and pay the fair rental value for the entire period during which the usurped house remained in his possession. The Shafi'is and Hanbalis hold that the usurper guarantees the usufruct of the usurped item, regardless of whether he actually utilized the usufruct or not, and whether it was real estate or movable property, because usufruct is a valuable asset that must be guaranteed.