What Are Redemption Rights
What are redemption rights, is a question I've had to answer more often than not these days especially because of all the foreclosure properties on the market. Redemption rights are of particular interest to anyone considering the purchase of a foreclosed home either as primary residence or investment property.
There are two generally established types of redemption rights and are not available in each state. Equitable right of redemption refers to the foreclosed individuals right to redeem his property before the foreclosure sale. In order to redeem the property the owner usually has to make up any payments in arrears plus any associated costs and generally the loan is reinstated. In some states the entire loan balance needs to be paid off.
The second redemption right is called Statutory Right of Redemption. This right of the foreclosed owners poses the biggest problem to a future buyer. State's that provide for statutory right of redemption vary in the length of the redemption period. From weeks and up to a year. That is; each state has a specified time up to a year after a foreclosure that the foreclosed owner may redeem their property. However, because the foreclosed owner has to come up with the payment of the loan, lost interest, legal fees and other costs incurred by the lender, plus the new owners have to be paid a percentage on their investment into the property...former owners rarely exercise their redemption rights...but it does happen. A way to ease some of the stress of buying a foreclosed property is to purchase the redemption rights from the owner. I've heard of owners selling their redemption rights for a few hundred dollars. Also, some lenders may insist on a redemption bond securing the property.
The purchaser of a foreclosed property needs to be aware of this...and remember the clock starts ticking on the day of foreclosure. If you are considering the purchase of a foreclosed property your agent can get you this information. If you don't have an agent yet, give me a call and I'd be glad to help answer your questions.
If you need a knowledgeable real estate professional in Madison or Huntsville Alabama area, why don't you let me Google that for you! I also know outstanding agents in all states and Canada should you need help relocating to a new area.