Foreclosure Statutory Redemption Laws

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What is Statutory Redemption?

“Statutory redemption” refers to a mortgagor’s right to regain their ownership of property that has been foreclosed.  Statutory redemption laws allow the borrower a limited amount of time (usually one year) to redeem their property if they are able to pay the amount that the property was sold for at a foreclosure sale.    

Statutory redemption laws serve a few very important purposes.  First, they give the mortgagor a valid chance to regain their property after foreclosure has been executed.  Also, statutory redemption helps to prevent extremely low sales prices, thus helping to prevent fraud and other unfair business practices.

Other parties such as junior mortgage holders can also be granted the right of statutory redemption. 

How Long do I Have to Claim Statutory Redemption?

First of all, not all states have statutory redemption laws.  Only about half of the 50 states have some form of statutory redemption law.  In states that do allow statutory redemption, the time period allotted may differ widely according to region.

Most states allow statutory redemption to occur within 6 months to 1 year after foreclosure.  Other states such as Illinois only allow redemption prior to the close of a foreclosure sale.  In order to redeem their property, the mortgagor must be able to pay the following within the allotted statutory time period:

Am I Allowed to Stay on the Property During the Statutory Redemption Period?

Yes- in states that allow statutory redemption, the mortgagor may remain on the premises after foreclosure.  However, they may only stay on the property during the statutory redemption time frame. 

If the statutory redemption time period expires and the mortgagor is unable to pay, then the purchaser at the foreclosure sale acquires all title, rights and interest in the property.   Failure to evacuate the premises in such cases may lead to other legal issues, such as trespassing or eviction. 

Is Statutory Redemption Different from Equitable Redemption?

Yes- statutory redemption is much different than equitable redemption.  Equitable redemption, or the “right of redemption”, refers to a defaulting mortgagor’s right to reclaim property before foreclosure begins.  On the other hand, statutory redemption only begins once foreclosure proceedings have already begun.

Also, equitable redemption has to do mainly with the paying of past due mortgage payments that the mortgagor has defaulted on.  Statutory redemption requires the mortgagor to pay the full price at which the property was sold during foreclosure.

Finally, every state allows for the equitable right of redemption before foreclosure.  As mentioned, statutory redemption is only available in about half the U.S. states.

Do I Need a Lawyer for Statutory Redemption of Foreclosed Property?

Foreclosure can sometimes be a difficult and complex process.  If your property has been or is going to be foreclosed, you may wish to contact a real estate lawyer for advice.  An experienced attorney can help you determine whether statutory redemption is allowed in your state.  If so, your lawyer will be able to guide you through the redemption process so that you can reclaim your property after foreclosure. 

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Last Modified: 05-06-2013 04:31 PM PDT

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