Stopping Foreclosure Using Right of Redemption Laws: Get Your Home Back Even After It’s Sold as a Foreclosure
If you're in foreclosure proceedings, you may still be able to get your house back, even if it's sold at auction.
Many homeowners are unaware that, depending on which state they live – they can get their home back even when it’s been sold at a foreclosure auction. The regulations that allow this is known as Right of Redemption laws.
Stopping Foreclosure: What are Right of Redemption Laws?
When a home is foreclosed on, right of redemption laws allow homeowners a certain amount of time to buy their property back. This is what’s known as the right of redemption period. And, it can occur before the actual sale of a home, or after a home has been sold.
Following are some specifics every homeowner should know about right of redemption laws if they really want to get their home back – even after it’s sold as a foreclosed property.
Stopping Foreclosure: 7 Things Homeowners Should Know About Right of Redemption Laws
1) Right of Redemption Laws Can Apply to More than Just the Homeowner: These laws apply to any person or entity that has a legal interest in a property.
When most people think of or write about right of redemption laws, they are usually referring to just the homeowner. But, your creditors can have right of redemption claims as well, eg, your bank/lending institution.
2) How Long Does a Homeowner Have to Redeem (Buy Back) Their Property: This all depends on which state you live in. Times frames range from a day to two years (Tennessee). Most are in the six month to one year time frame.
3) Specifics Vary Widely: The specifics of right of redemption laws vary greatly from state to state. There is no one size fits all here. For example:
In Illinois, the redemption period is 7 months – from the time the foreclosure notice is filed. OR, 3 months from the time a final foreclosure judgment is entered.
In California, on the other hand, the redemption period depends on how much the property sells for. For example, if it sells for enough to pay off the mortgage the person/entity that holds redemptive rights has 3 months to redeem the property.
If the property sells for less than is needed to satisfy the mortgage in full, then the redemption period is 12 months.
Florida redemption laws have a unique twist. The redemption period ends the day the property is sold. BUT, a court is allowed to “review the sale to ensure that a fair price was paid for it.” One final twist: there is no definitive time limit set during which a court must conduct its review. It usually takes only about 10 days though, but it doesn’t have to.
4) How Much Does a Homeowner Have to Pay to Redeem a Property: The former homeowner (or other person/entity with an interest in the property) must pay back any outstanding mortgage principal, along with interest, back taxes, etc. along with all costs the lender incurred to sell the property.
5) Selling of Rights: A homeowner can sell his Rights of Redemption to another party – before or after a foreclosure.
Many who have no hope of retaining their homes – or repurchasing them during the redemption period --- are happy to do so because it gives them so ready cash. Most sell for a few hundred or a few thousand dollars.
6) No Right of Redemption in Non-Judicial Foreclosure States: If you live in a state that collateralizes home loans as deeds of trusts instead of mortgages, then there is no redemption period. Once a home is sold at a foreclosure auction, for example, the sale is final.
The reason is, deed of trust states operate under what’s known as non-judicial foreclosure. This means they don’t have to take you to court to foreclose on your property.
It also means that foreclosures tend to be quicker, easier and less expensive than in states with judicial foreclosure.
7) Foreclosure Investors Beware: Purchasing foreclosed properties in states that have redemption laws can be risky if you don’ t know what you’re doing. On the other hand, as an investor, you can purchase the rights of redemption from a homeowner directly, leaving you in control if you decide to use this method to to purchased foreclosed properties.
Facing a “Redemption Foreclosure” Process? Don’t Let Lenders Bully You
Even though foreclosure laws and Right of Redemption laws vary by state, in most cases, a homeowner has several chances before their home is sold at auction to stop the foreclosure process.
Some unscrupulous lenders will try to bully you when you default. A common tactic is to tell a struggling, scared homeowner that the entire amount on their home loan is due. While technically true, it’s rarely enforced.
In these economic times especially, many lenders are happy to work out other solutions to help you stop foreclosure, eg, a mortgage modification, a forbearance, etc.
States with Right of Redemption Laws
Following is a list of states with redemption laws, and how long the period is.
**Alabama: 1 year
**Alaska: 1 year
**Arkansas: 1 year
**California: 1 year
**Connecticut: Based on court decree
**Florida: 1 day or less; immediately upon sale – with judicial review
**Idaho: 1 year
**Illinois: 3 months
**Iowa: 20 days
**Kansas: 1 year
**Kentucky: 1 year
**Maine: 90 days
**Michigan: 30-36 days
**Minnesota: 6 months
**Mississippi: 30 days
**Missouri: 1 year
**New Jersey: 10 days
**New Mexico: 30 days
**North Dakota: 6 months to 1 year
**Oregon: 6 months
**South Dakota: 30 days or more
**Tennessee: Up to 2 years, unless waived at sale of property
**Vermont: 6 months to 1 year
**Wisconsin: 1 year
**Wyoming 30 days or more
If you need help stopping a foreclosure, consult a few foreclosure lawyers (you want to get a few opinions) – in your jurisdiction -- to see if they can help.
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