Also known as:rights of redemption · redemption right · redemption rights · statutory right of redemption
Written by attorneys — see sources below.
2 senses
1
equity of redemption
An equitable right allowing a mortgagor to redeem mortgaged property by paying the secured debt in full before foreclosure terminates the interest. The right arises by operation of law once a mortgage is created and persists until properly extinguished. Courts developed the right to prevent forfeiture of the property upon default.
2
statutory right of redemption
A statutory right permitting a mortgagor or junior lienholder to redeem property after a foreclosure sale by paying the sale price plus interest and costs within a fixed period. The right exists only in jurisdictions that enact it and is distinct from the pre-foreclosure equity of redemption. The purchaser at the sale holds title subject to the redemption right until the period expires.
Each sense below has its own examples, sources, and questions.
Sense 1
1
equity of redemption
An equitable right allowing a mortgagor to redeem mortgaged property by paying the secured debt in full before foreclosure terminates the interest. The right arises by operation of law once a mortgage is created and persists until properly extinguished. Courts developed the right to prevent forfeiture of the property upon default.
See Our Sources· 1 primary source
Common Law
Restatements
Examples3
Mortgagee Attempts Strict Forfeiture
Roberto Reyes borrowed funds from Riverstone Manufacturing secured by a mortgage on his warehouse. When Reyes missed one payment, Riverstone recorded a deed purporting to transfer title under a side letter that eliminated any cure or redemption opportunity. Reyes tendered the full debt plus interest and costs the next day. The tender satisfied the equity of redemption and prevented the mortgagee from converting the security device into an absolute conveyance.
Choice-of-Law Aggregation for Redemption
Rowan Russell granted a security interest in an automobile located in State Y to Ridgeway Partners under a loan originated in State X. States X and Y maintain identical local rules governing a debtor's right of redemption. Because the rules are the same, the contacts in both states are treated as located in a single state for choice-of-law purposes on the redemption issue.
Mortgage Moratorium Preserves Redemption
Ryan Roberts faced foreclosure during an economic emergency. A state statute extended the period for exercising the equity of redemption and delayed foreclosure sales. Roberts tendered payment within the extended window. The extension preserved his equitable right to redeem despite the mortgagee's attempt to accelerate and foreclose immediately.
4 common questions
Students Frequently Ask...
What is the difference between the equity of redemption and statutory redemption?
The equity of redemption allows a mortgagor to pay the debt and reclaim the property before foreclosure extinguishes the interest. Statutory redemption, available only in some states, permits redemption after the foreclosure sale by paying the sale price plus costs within a fixed period. The two rights operate at different stages and are extinguished by different events.
Supporting sources
Can parties waive the equity of redemption in advance?
Sense 2
2
statutory right of redemption
A statutory right permitting a mortgagor or junior lienholder to redeem property after a foreclosure sale by paying the sale price plus interest and costs within a fixed period. The right exists only in jurisdictions that enact it and is distinct from the pre-foreclosure equity of redemption. The purchaser at the sale holds title subject to the redemption right until the period expires.
See Our Sources· 1 primary source
Common Law
Examples1
Post-Sale Statutory Redemption
Ricardo Rojas defaulted on a mortgage held by Raven Logistics. After a foreclosure sale, Rojas exercised the statutory right of redemption by paying the sale price plus interest and costs within the prescribed period. The purchaser at the sale took title subject to that redemption right until the statutory window closed.
1 common questions
Students Frequently Ask...
Who may exercise statutory redemption after foreclosure?
The mortgagor and, in many states, junior lienholders may redeem by paying the foreclosure sale price plus interest and costs within the statutory period. The purchaser at the sale takes title subject to the redemption right until the period expires.
Home Building & Loan Association v. Blaisdell290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413 (1934)
The Blaisdells executed a mortgage on their property in Minneapolis to the Home Building & Loan Association on August 1, 1928. The mortgage contained a valid power of sale by advertisement. After default, the mortgage was foreclosed and the property sold to the Association on May 2, 1932, for $3700.98. The period of redemption under the law then in effect was set to expire on May 2, 1933.
On April 18, 1933, Minnesota enacted Chapter 339 of the Laws of 1933, known as the Mortgage Moratorium Law. The statute authorized district courts to extend the period of redemption from foreclosure sales for such additional time as the court deemed just and equitable, not beyond May 1, 1935, upon condition that the mortgagor pay a reasonable part of the income or rental value toward taxes, insurance, interest, and principal. The Blaisdells applied to the District Court of Hennepin County for an extension of the redemption period.
The district court found that the reasonable rental value of the property was $40 per month and the present market value was $6000. It extended the redemption period to May 1, 1935, requiring the Blaisdells to pay $40 per month to the Association. The Supreme Court of Minnesota affirmed the order.
The Home Building & Loan Association appealed to the United States Supreme Court, which reviewed the judgment sustaining the statute as applied to the preexisting mortgage.
No. Agreements that clog or waive the equity of redemption are void as against public policy. Courts refuse to enforce side letters or clauses that convert a mortgage into an absolute deed upon default or eliminate the opportunity to cure and redeem.
Supporting sources
When does the equity of redemption end?
The equity of redemption ends upon proper foreclosure that joins or notifies the mortgagor. Foreclosure may be judicial, by power of sale, or strict in limited jurisdictions. Once the foreclosure process validly terminates the interest, the right no longer exists.
Supporting sources
Does an absolute deed given as security still preserve a right of redemption?
Yes. When parties intend an absolute deed to serve only as security for a debt, equity treats the transaction as a mortgage. The grantor retains an equitable right to redeem upon repayment, and parol evidence is admissible to show the security purpose.
Supporting sources
Real PropertyMortgages/security devices · Types of security devicesUBEIntermediate