Also known as:clogs on the equity of redemption · clogging the equity of redemption · clogging equity of redemption · equity of redemption
Written by attorneys · grounded in primary & secondary sources — see below
An agreement or condition that prevents a defaulting mortgagor from redeeming the mortgaged property upon payment of the debt. Such provisions are void as against public policy because they convert a security device into an absolute conveyance and eliminate the mortgagor's equitable opportunity to reclaim the collateral.
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Common Law
Restatements
Study Supplements
Dictionaries
How it applies
Common Examples
4
Side Letter Eliminates Cure Right
Christopher Collins granted Compass Logistics a mortgage on his warehouse to secure a construction loan. A side letter executed the same day provided that any missed payment would cause title to vest permanently in Compass Logistics with no opportunity for Christopher Collins to redeem. After Christopher Collins missed one payment, Compass Logistics recorded a deed purporting to transfer ownership. Christopher Collins tendered the full amount due plus interest, but Compass Logistics refused the tender.
Automatic Forfeiture Upon Default
Carmen Choi executed a mortgage on her retail building in favor of Central Dynamics. The mortgage included a clause stating that upon any default the property would become the absolute property of Central Dynamics without foreclosure or redemption. After Carmen Choi missed an installment, Central Dynamics claimed ownership and refused her tender of the full debt. The clause operated to strip Carmen Choi of any right to pay off the loan and recover the building.
Option to Purchase at Default Price
Claire Campbell mortgaged her apartment complex to Coastal Shipping. The loan documents granted Coastal Shipping an option to purchase the property for the outstanding balance if Claire Campbell defaulted. Upon default Coastal Shipping attempted to exercise the option rather than foreclose. The option would have allowed Coastal Shipping to acquire the property without affording Claire Campbell any redemption opportunity.
Waiver of Redemption in Mortgage
Cade Carpenter borrowed from Cardinal Insurance and signed a mortgage containing an express waiver of his equity of redemption. After default Cardinal Insurance asserted that the waiver barred any attempt by Cade Carpenter to redeem by paying the debt. The waiver attempted to eliminate the right to redeem before foreclosure could occur.
Common questions
Frequently Asked
4
What makes an agreement a clog on the equity of redemption?+
An agreement constitutes a clog when it unreasonably restricts or waives the mortgagor's right to redeem the property by paying the debt before foreclosure. Provisions that make redemption impossible or convert the mortgage into an absolute conveyance are classic examples. Courts void such agreements because they undermine the fundamental policy that a mortgage serves only as security for repayment.
Supporting sources
Does a side letter that automatically vests title upon default clog the equity of redemption?+
Yes. A side letter providing that missing a single payment causes title to vest permanently in the lender with no opportunity to cure or redeem is a classic clog. The automatic transfer eliminates any window for the mortgagor to satisfy the debt and reclaim the property. Such a clause is unenforceable regardless of the parties' sophistication or the risk profile of the loan.
Supporting sources
How does the doctrine against clogging interact with installment land contracts?+
When a jurisdiction treats installment land contracts like mortgages, a forfeiture clause that wipes out the buyer's equity without foreclosure procedures operates as a clog. The seller cannot use a bare forfeiture provision to terminate the buyer's equitable interest for a single default. The buyer is entitled to mortgage-style foreclosure protections that preserve the right to redeem or cure.
Supporting sources
Can a mortgagee obtain an option to purchase the mortgaged property without creating a clog?+
Courts sometimes apply the clogging doctrine to deny specific performance of an option to purchase granted to the mortgagee incident to the loan. The option can be viewed as allowing the mortgagee to acquire the property by means other than foreclosure. An overly rigid application may be tempered in commercial contexts where the option reflects a bargained-for sharing of upside potential.
Supporting sources
Real PropertyMortgages/security devices · Security relationshipsUBEFoundational