Also known as: equitable rights of redemption · equity of redemption · right of redemption
Written by attorneys · grounded in primary & secondary sources — see below
The mortgagor's right to redeem mortgaged property by paying the secured debt before foreclosure. This right arises by operation of equity once a mortgage or absolute deed intended as security is executed and cannot be waived or clogged by agreement. Foreclosure terminates the right while statutory redemption arises only after sale in states that provide it.
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Elena Estrada granted a mortgage on her warehouse to Edgewater Capital. After default Edgewater claimed immediate possession under title theory. Elena tendered full payment before any foreclosure sale. The tender preserved her right to retain the property free of the mortgage.
Enigma Technologies gave a security interest in equipment located in state Y to Eclipse Manufacturing under a loan closed in state X. Both states apply identical rules on a debtor's right of redemption. The court aggregated the contacts and treated the transaction as occurring in a single state for choice-of-law purposes.
Emily Ellis defaulted on a mortgage held by Empire Logistics. The lender conducted a judicial foreclosure sale that produced a winning bid. Emily's equitable right of redemption ended at the sale even though she later attempted to tender the debt.
Elliot Edmonds lost his farm at a foreclosure sale to a third-party buyer. State law granted a six-month statutory redemption period. Elliot paid the sale price plus interest and costs within the period and regained title free of the mortgage.
Esme Ellington signed a mortgage containing a side letter that automatically vested title in the lender upon any missed payment. After default the lender recorded a deed purporting to eliminate redemption. The court held the side letter void and allowed Esme to redeem by paying the debt.
Esther Eisenberg defaulted on a home mortgage during widespread economic distress. State law extended the redemption period and stayed foreclosure. The lender challenged the extension as an unconstitutional impairment of contract. The court upheld the temporary relief while preserving the underlying right to redeem.
The equitable right of redemption allows the mortgagor to pay the debt and reclaim the property before foreclosure sale occurs. Statutory redemption arises only after a foreclosure sale in states that recognize it and requires payment of the sale price plus interest and costs within a fixed period.
No agreement that unreasonably restricts or waives the right to redeem before foreclosure is enforceable. Courts treat such provisions as void because they convert a security device into an absolute conveyance and undermine the fundamental protection mortgage law provides borrowers.
…defendants, arguing that the option agreement violated the New York statutory prohibition against remote vesting and clogged its equity of redemption under the mortgage. Defendant Pergola subsequently served Symphony with separate notice of default dated April 4,1985, informing Symphony that it was exercising the option on behalf of all…
…the mortgagee is strictly speaking, the owner of the land, and may recover it in an ejectment. The mortgagor has no more than an equity of redemption
…and treated the contract as embodying a mortgage. The consequence of this legal classification was that plaintiffs held an equity of redemption, such that the only means to extinguish plaintiffs’ interest was foreclosure. On its own initiative, the court commenced such a foreclosure. The court explained, “Although [defendant] has…
Under title theory the mortgagee holds legal title and the mortgagor possesses only the equity of redemption. Under lien theory the mortgagor retains legal title until foreclosure. The intermediate theory blends both approaches. Each theory determines when possession and rents shift but does not eliminate the redemption right itself.
When the parties intend the deed to secure repayment of funds advanced rather than to effect an outright sale, courts treat the transaction as an equitable mortgage. Parol evidence including side letters and contemporaneous writings is admissible to prove that intent, and the grantor retains the right to redeem upon tender of the debt.