Also known as: redemption privileges · right of redemption · equity of redemption
Written by attorneys · grounded in primary & secondary sources — see below
The mortgagor's right to reclaim encumbered property by satisfying the underlying debt before foreclosure cuts off that right. The privilege exists under the equity of redemption recognized in all mortgage theories and may extend after sale under statutory redemption provisions in some jurisdictions. Agreements that unreasonably restrict or waive the right are void as against public policy.
Roberto Reyes granted a mortgage on his warehouse to Raven Logistics under a title-theory jurisdiction. When Reyes defaulted, Raven claimed immediate ownership and the right to rents. Reyes tendered full payment of the debt plus costs, invoking his redemption privilege to reclaim title before any foreclosure sale occurred.
Rhapsody Entertainment gave a security interest in an automobile located in State Y to a lender in State X. Both states apply identical rules on a debtor's right of redemption. The court aggregated the contacts for choice-of-law purposes and treated the redemption privilege issue as arising in a single state.
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Ricardo Rojas defaulted on a mortgage held by Redline Automotive. Redline initiated judicial foreclosure and purchased the property at the sale. Rojas's redemption privilege ended upon completion of the foreclosure sale, leaving him without further right to reclaim the land.
Rhea Reynolds's home was sold at a foreclosure sale to satisfy a mortgage held by Regal Apparel. State law provided a sixty-day statutory redemption period. Reynolds paid the sale price plus interest and costs within the period and thereby exercised her redemption privilege to recover title.
Ronald Reed signed a mortgage containing a side letter that automatically transferred title to the lender upon any missed payment. Reed later tendered the full debt. The court held the side letter void and enforced Reed's redemption privilege because the clause impermissibly clogged the equity of redemption.
The equity of redemption allows the mortgagor to pay the debt and reclaim the property before foreclosure sale. Statutory redemption, available only in some states, permits redemption after the sale by paying the sale price plus interest and costs within a statutory window.
Any agreement that makes redemption impossible or converts the mortgage into an absolute conveyance is void. Side letters providing for automatic title transfer upon default or waiving the right to redeem in advance are classic examples that courts refuse to enforce.
Title theory gives the mortgagee legal title and leaves the mortgagor only the equity of redemption. Lien theory keeps legal title with the mortgagor and creates only a security lien. Both theories preserve the core redemption right, though they differ on possession and rents pending foreclosure.
Equity of redemption ends at the foreclosure sale. In states providing statutory redemption, a separate post-sale right may still exist for a limited period after the sale.