Also known as: statutory redemptions · statutory right of redemption
Written by attorneys · grounded in primary & secondary sources — see below
A statutory right allowing a mortgagor and sometimes junior lienholders to recover property after a foreclosure sale by paying the sale price plus interest and costs within a prescribed period. This right arises only after the foreclosure sale and is distinct from the equity of redemption that ends at sale. Where the statute exists the purchaser at the sale takes title subject to the redemption right until the period expires.
Serena Soto defaulted on her mortgage after crop losses. The lender foreclosed and Stonehaven Properties purchased the farm at the sale for $180,000. State law grants mortgagors six months to redeem by paying the sale price plus interest and costs. Within the period Serena obtained new financing and tendered the required amount to Stonehaven Properties. The tender cut off Stonehaven's interest and restored title to Serena.
Samuel Soto owned a warehouse subject to a senior mortgage and a junior lien held by Sterling Manufacturing. After default the senior mortgagee foreclosed and Southland Foods bought the property at auction. State law permits junior lienholders to redeem within sixty days by paying the sale price plus costs. Sterling Manufacturing tendered the statutory amount on the fifty-fifth day. The tender gave Sterling Manufacturing the rights of the foreclosure purchaser and cut off Southland Foods' interest.
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The mortgagor must pay the foreclosure sale price plus statutory interest and allowable costs to the purchaser at the sale. This amount is fixed by statute and is distinct from the original mortgage debt.
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The equity of redemption allows the mortgagor to stop a foreclosure by paying the full debt before the sale occurs. Statutory redemption arises only after a completed foreclosure sale and permits redemption by paying the sale price plus interest and costs during the statutory window.
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The mortgagor is always entitled to redeem. Junior lienholders may also redeem in states whose statutes extend the right to them, provided their interests were properly recorded and they tender the required amount within the statutory period.
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The purchaser takes title subject to the outstanding statutory redemption right. If redemption occurs the sale is annulled and title is restored to the redeemer. If the period expires without redemption the purchaser's title becomes absolute.
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