Also known as: clog the equity of redemption · clogs the equity of redemption · clogged the equity of redemption · clog equity of redemption
Written by attorneys · grounded in primary & secondary sources — see below
A doctrine in mortgage law that voids any agreement made at the time of the mortgage that unreasonably restricts or waives the mortgagor's right to redeem the property by paying the debt before foreclosure. The doctrine treats such provisions as contrary to public policy because a mortgage must function solely as security for a debt rather than an absolute conveyance.
Ramos Components borrowed two million dollars from Harbor Bank secured by a mortgage on its factory. At closing Ramos also executed a warranty deed placed in escrow that Harbor could record as an absolute conveyance if Ramos missed any payment by more than thirty days. Two years later Ramos defaulted for thirty-five days. Harbor recorded the deed without foreclosure and claimed full ownership. Ramos sued to set aside the deed.
A commercial borrower in default conveyed its mortgaged property directly to the lender in full satisfaction of the debt. The parties executed the conveyance after default to avoid foreclosure costs and delays. The borrower later sought to redeem by tendering the full amount due. The lender refused and asserted ownership under the deed.
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Any agreement made at mortgage creation that makes redemption impossible or converts the mortgage into an absolute conveyance upon default is a clog. Courts invalidate such provisions as void against public policy because they undermine the fundamental right to redeem by paying the debt before foreclosure.
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A deed in lieu executed after default as a substitute for foreclosure does not clog the equity of redemption. The doctrine applies only to agreements made at the time the mortgage is created that restrict the right to redeem in advance.
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No. Even in arm's-length commercial transactions between counseled parties the prohibition on clogging applies. Courts invalidate advance waivers regardless of sophistication because the public policy protecting the equity of redemption cannot be contracted away at mortgage creation.
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A mortgagor may waive the right to redeem only after the mortgage has been created and for new consideration. Waivers contained in the original mortgage documents or executed contemporaneously with the loan are unenforceable.
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