The right of redemption applies to owners of foreclosed property. This means that a homeowner has a right to “redeem” their property, and reclaim ownership, by paying a certain amount to the lender. There are two types of redemption:

In practice, this right is rarely exercised, since it is usually difficult for a homeowner in foreclosure to come up with the money to pay off the entire balance of the mortgage or the foreclosure sale price.

For investors who buy foreclosed properties, the existence of a post-sale redemption right can be problematic, as the former owner has a chance of reclaiming the property after it has been bought by a third party. One option for dealing with this is to buy the right of redemption from the previous owner, if state law allows it.

Equitable Right of Redemption

The equitable right of redemption is available in all states. This right allows a borrower the opportunity to pay off the balance of mortgage debt, including interest and foreclosure fees, on the property. This right can be exercised at any time prior to the foreclosure sale.

Statutory Right of Redemption

The statutory right of redemption allows a homeowner to reclaim ownership of a foreclosed property for a certain period of time after it is sold at a foreclose sale. To exercise this right, the borrower has a definite amount of time to pay the foreclosure sale price. The statutory right, unlike its equitable counterpart, is not available in every state.

Do I Need to Consult an Attorney to Exercise a Right to Redemption?

The foreclosure process can be complicated and daunting. If you are facing foreclosure and want to know more about the redemption rights applicable in your state, you should contact a foreclosure attorney.