Also known as:clogs on equity of redemption · clogging the equity of redemption · clog on the equity of redemption
Written by attorneys · grounded in primary & secondary sources — see below
A principle in mortgage law that invalidates any agreement unreasonably restricting or waiving a mortgagor's right to redeem mortgaged property by paying the secured debt before foreclosure. The doctrine treats such restrictions as void because they convert a security device into an absolute conveyance and undermine the fundamental character of a mortgage.
Sources & Authorities
How it applies
Common Examples
2
Automatic Conversion on Income Drop
Charlotte Chung grants a mortgage on her apartment building to Cascade Manufacturing to secure a loan. The mortgage provides that if annual net rental income falls below a stated threshold the mortgage automatically converts into a deed conveying full ownership to Cascade with no right for Charlotte to redeem by paying the debt. When income later drops Cascade records the deed. A court refuses to enforce the conversion clause and preserves Charlotte's right to redeem by tendering the full balance.
Purchase Option Incident to Mortgage
Christopher Collins borrows from Crestview Holdings and grants a mortgage on commercial real estate. At the same closing the parties execute an option allowing Crestview to purchase the property at a fixed price if Christopher defaults. When Christopher later defaults Crestview seeks specific performance of the option. The court denies enforcement because the option permits acquisition of the land without foreclosure and thereby clogs the equity of redemption.
Put it into practice
Test Yourself
9
Practice Questions5
· 1 primary source
Select any source to read its text and confirm it supports the definition.
Common Law
Restatements
Study Supplements
Common questions
Frequently Asked
4
Can sophisticated commercial parties validly waive the equity of redemption in the original mortgage transaction?+
No. Courts treat the equity of redemption as an essential incident of every mortgage that cannot be waived or unreasonably restricted at the time the mortgage is created. Agreements that convert the security interest into an absolute conveyance or make redemption impossible remain void regardless of the parties' sophistication or arm's-length bargaining.
Supporting sources
Does a clause that automatically transfers title upon a missed payment or revenue shortfall clog the equity of redemption?+
Yes. Such a provision renders redemption impossible and converts the mortgage into an outright forfeiture without foreclosure. Courts invalidate the clause and preserve the mortgagor's right to redeem by paying the debt before a proper foreclosure occurs.
Supporting sources
Is an option or warrant granted to the mortgagee to purchase the mortgaged property treated as a clog?+
Yes when the option is granted incident to the mortgage transaction. Enforcement would allow the mortgagee to acquire the real estate by means other than foreclosure and would render the land irredeemable.
Supporting sources
Does a clause terminating the right to redeem six months before the loan maturity date clog the equity of redemption?+
Yes. The clause unreasonably restricts the mortgagor's ability to pay the debt and reclaim the property before foreclosure. Courts refuse to enforce it and allow redemption up to the time of foreclosure.
Supporting sources
Real PropertyMortgages and foreclosure · ForeclosureNEXTGENFoundational