Regaining Ownership After Foreclosure: Statutory Redemption
One's home is said to be their castle, but the truth of the matter is that few of us own our dwelling outright. The unfortunate truth of the matter is that the bank often has a significant interest in your home and, if you find yourself unable to pay your mortgage, you may find yourself ousted. This isn't necessarily the end of the story, however.
Depending on your state's laws, you may be able to regain ownership of your home after it has been foreclosed. The process, known as "statutory redemption," allows mortgagors (homeowners) a limited amount of time, often one year, to reclaim (or redeem) the property if they are able to pay what the property sold for at the foreclosure sale. The mortgagor also must pay a statutory rate of interest to the foreclosure sale purchaser.
This article focuses on the process of statutory redemption. If your home is currently in the foreclosure process, or a foreclosure is looming on the horizon, there may be other options that you can pursue before you are put out on the streets. See FindLaw's Foreclosure Process and Avoiding Foreclosure sections for more information.
How the Statutory Redemption Process Works
Specific procedures may vary by state, but typically the process begins when you make a written demand to the purchaser for a statement of the charges required to redeem and thus reclaim the property. Then the purchaser (the party that bought the property through foreclosure, or the lender) will have a limited amount of time, often just 10 days or so, to send an itemized statement of charges. Depending on your state law, you may be able to redeem the property without having to pay the redemption price or the cost of any improvements.
If you are unable to pay the redemption price after filing a claim, then you forfeit your claim. The purchaser will then acquire the title, all rights and interest in the property. If you fail to evacuate the home at this point, you could face eviction or even trespassing charges.
Junior lien holders also have a right to redeem under statutory redemption laws (in order of their priority) though not until after the period for the mortgagor to redeem runs out.
State Statutory Redemption Laws
The majority of states allow for this process. And in the majority of states that allow redemption, mortgagor may retain possession of the property during this period. The redemption period in states that allow it ranges from just 30 days to as high as two years. Many states reduce the redemption period if the property has been abandoned, while borrowers may waive their redemption rights in many states.
States that allow for statutory redemption include California, Illinois, Florida, and Texas.
Learn More About Redemption
Your state’s laws have a big impact on your rights when you are dealing with foreclosure, redemption, or other real estate issues. You’ll want to ensure that you make informed, intelligent decisions, which means you'll benefit from the assistance of an experienced and knowledgeable professional. A local foreclosure attorney may be able to help clarify your rights.