Also known as: rights to redeem · right of redemption
Written by attorneys · grounded in primary & secondary sources — see below
The equitable right of a mortgagor or debtor to regain full title to property pledged as security by paying the full amount of the secured obligation plus costs before foreclosure or other disposition occurs. This right exists until the security interest is extinguished by proper foreclosure proceedings or by a binding contract for disposition of the collateral. Agreements that attempt to waive or unreasonably restrict the right in advance are void as against public policy.
Regina Robinson granted First Dev a mortgage on her data center to secure a multi-year loan. A side letter executed the same day provided that any missed payment would cause title to vest permanently in First Dev with no opportunity to redeem. After missing one payment Regina tendered the full amount due plus interest and costs, but First Dev refused. The side letter is unenforceable and Regina retains the right to redeem by satisfying the debt.
Roberto Reyes in State X granted a security interest in an automobile located in State Y to Redwood Bank. States X and Y maintain identical local rules on a debtor's right of redemption. When a dispute arises over redemption after default, the contacts in both states are treated as if grouped in a single state for choice-of-law purposes. The court therefore applies the shared redemption rule without further conflict analysis.
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Ruby Rivera executed a mortgage on her warehouse containing a clause that purported to terminate her right to redeem four months after any default. After default Ruby tendered the full amount due before any foreclosure sale occurred. The clause is void and Ruby may still redeem by paying the obligation in full. The mortgagee must accept the tender and release the lien.
Roland Rhodes conveyed his farm to Raven Logistics by absolute deed while simultaneously signing a side letter stating the deed secured repayment of funds advanced. Roland remained in possession and made payments reducing the balance. Upon tender of the remaining amount Raven Logistics must reconvey title because the transaction is treated as a mortgage. Roland therefore retains the equitable right to redeem.
Rajesh Rao defaulted on a home mortgage held by Home Building & Loan during a statewide economic emergency. A state statute extended the redemption period and stayed foreclosure sales for two years. Rao tendered payment within the extended period. The extension is upheld and Rao successfully redeems the property before the mortgagee can complete foreclosure.
Any agreement that unreasonably restricts or waives the right to redeem before foreclosure, such as a clause converting the mortgage into an absolute conveyance upon default or eliminating any opportunity to cure, is void as against public policy.
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Yes. When parties intend an absolute deed only as security for a debt, equity treats the deed as a mortgage and the grantor retains the equitable right to redeem upon repayment, with parol evidence admissible to prove that intent.
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The right ends when the secured party disposes of the collateral or enters into a contract for its disposition, so a debtor's tender after a binding lease or sale contract is too late.
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Contacts located in two or more states that maintain identical local rules on the debtor's right of redemption are aggregated and treated as if grouped in a single state.
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