Also known as: equitable redemptions · equity of redemption
Written by attorneys · grounded in primary & secondary sources — see below
A mortgagor's right to redeem the mortgaged property by paying the full debt before foreclosure occurs. This right prevents the mortgage from operating as an absolute conveyance and is protected against agreements that attempt to waive or restrict it unreasonably.
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Elliot Edmonds granted a mortgage on his warehouse to a lender in a title-theory jurisdiction. The lender claimed immediate ownership after default and attempted to collect rents directly. Elliot tendered the full debt amount before any foreclosure sale. The court recognized his equitable redemption right and required reconveyance upon payment.
Emmett Egan defaulted on a mortgage secured by his retail building. The mortgagee initiated judicial foreclosure and scheduled a sale. Emmett arranged financing and tendered the full debt plus costs one day before the sale date. The court halted the foreclosure because equitable redemption remained available until the sale.
Ewan Eckhart lost his apartment complex at a foreclosure sale. State law provided a six-month statutory redemption period after the sale. Ewan tendered the sale price plus interest within that window. The purchaser had to convey title back because statutory redemption supplemented the now-terminated equitable right.
Elise Everly signed a mortgage containing a side letter that automatically transferred title upon any missed payment. After one late installment the lender recorded a deed purporting to end all rights. Elise tendered the full amount plus interest the next day. The court voided the side letter as an impermissible clog on equitable redemption.
Emma Erickson faced foreclosure on her farm during an economic emergency. A state law temporarily extended the period for redemption beyond the original mortgage terms. Emma continued payments under the extended schedule. The court upheld the extension as consistent with preserving the equitable redemption right until a sale could occur.
Erika Echevarria redeemed her commercial property after a foreclosure sale by paying the sale price. She later sold the property and calculated her tax basis. The redemption payment was added to her original basis because the equitable redemption right had allowed her to restore full ownership before final loss of title.
Equitable redemption allows the mortgagor to pay the debt and reclaim the property before any foreclosure sale occurs. Statutory redemption, recognized in only about half the states, permits redemption after the foreclosure sale by paying the sale price plus interest and costs within a set period. The two rights operate at different stages and are not interchangeable.
Clogging occurs when an agreement unreasonably restricts or waives the mortgagor's right to redeem before foreclosure. Examples include side letters that automatically transfer title upon default or provisions that convert the mortgage into an absolute conveyance. Such clauses are void as against public policy because they undermine the protective purpose of the right.
…defendants, arguing that the option agreement violated the New York statutory prohibition against remote vesting and clogged its equity of redemption under the mortgage. Defendant Pergola subsequently served Symphony with separate notice of default dated April 4,1985, informing Symphony that it was exercising the option on behalf of all…
…the mortgagee is strictly speaking, the owner of the land, and may recover it in an ejectment. The mortgagor has no more than an equity of redemption
…and treated the contract as embodying a mortgage. The consequence of this legal classification was that plaintiffs held an equity of redemption, such that the only means to extinguish plaintiffs’ interest was foreclosure. On its own initiative, the court commenced such a foreclosure. The court explained, “Although [defendant] has…
Title-theory jurisdictions treat the mortgagee as holding legal title, leaving the mortgagor with only the equity of redemption. Lien-theory jurisdictions allow the mortgagor to retain legal title while the mortgage creates a lien. Intermediate theories blend the two approaches. The chosen theory influences possession and foreclosure procedures but does not eliminate the equitable redemption right itself.
The equity of redemption ends at the foreclosure sale. After that point any remaining redemption right must come from a statutory provision if the state provides one. Payment or tender before the sale preserves the right and prevents termination of the mortgagor's interest.