Also known as: clogs the mortgagor’s equity of redemption · clogging the mortgagor’s equity of redemption · clog the equity of redemption · clogging the equity of redemption · equity of redemption · rule against clogging
Written by attorneys · grounded in primary & secondary sources — see below
An equitable principle that invalidates any contractual provision attempting to waive or unduly restrict a mortgagor's right to redeem mortgaged property by satisfying the underlying debt prior to foreclosure. Provisions that convert a mortgage into an absolute conveyance or eliminate the redemption opportunity are unenforceable. The doctrine preserves the mortgagor's opportunity to recover the property upon full payment.
Cameron Cruz borrowed funds from Central Dynamics secured by a mortgage on his warehouse. A side letter signed the same day provided that any missed payment would cause title to vest permanently in Central Dynamics with no further opportunity for redemption. After one late payment Cameron tendered the full amount due plus interest but Central Dynamics refused and recorded a deed. The side letter is unenforceable and Cameron retains the right to redeem.
Connor Clark granted a mortgage to Coastal Shipping on commercial property. The agreement stated that upon any default the mortgagee could take immediate title without foreclosure or redemption. After default Coastal Shipping attempted to record title directly. The automatic vesting clause is unenforceable and Connor may still redeem by paying the debt.
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Craig Caldwell's property was sold at foreclosure to Cardinal Insurance. State law provided a thirty-day statutory redemption period. A clause in the original mortgage purported to waive any post-sale redemption rights. Craig tendered the required amount within the period. The waiver is void and Craig may redeem.
Charles Cunningham conveyed his land by warranty deed to Cobalt Energy to secure a short-term loan. A side letter stated the deed was security only and allowed repurchase upon repayment. Cobalt later claimed outright ownership. The transaction is treated as a mortgage and Charles retains the equity of redemption.
Any provision that makes redemption impossible or converts the mortgage into an absolute conveyance is void. Side letters providing for automatic title transfer upon default and absolute deeds intended only as security are classic examples. Courts invalidate these clauses to preserve the mortgagor's substantive right to redeem.
Yes. Even in commercial loans with high interest rates reflecting risk, courts refuse to enforce waivers of redemption. Public policy against forfeiture remains strong regardless of party sophistication or negotiated terms.
When parties intend an absolute deed only as security for a debt, equity treats it as a mortgage. The grantor retains an equitable right to redeem upon repayment and the grantee holds title only as security. Parol evidence is admissible to show the true intent.