Redemption Period Definition
The time duration offered to borrowers, during or even after a foreclosure in some cases, to return the borrowed money – pay off the debt owed to the investors, and reclaim their assets, is called the ‘Redemption Period’ in Real Estate Foreclosures.
It’s also a term used for online properties like website addresses. Owners can reclaim their website domain for a period of 30 days after the yearly subscription has expired. Once this grace period is over, a ‘Redemption Period’ of 30 days begins when the owner can reclaim the domain for an additional fee. This is very distinct from real estate Redemption Period.
A Little More on What is a Redemption Period
Equitable Right of Redemption
A grace period to redeem a property or other assets like securities is offered to borrowers before an event like a foreclosure. If your assets are in the danger of being sold off to recover the debts you owe, you can block this sale by paying off the entire debt inclusive of the down payment, interests accrued, collateral damages, late payment fee, and transactional costs – also known as the ‘Cost to Redeem’, before the expiry of this grace period. ‘Cost to Redeem’ can be found out by requesting the ‘Pay Off’ quote from the servicer.
This ‘Redemption Period’ is an equitable principle to allow borrowers, even those who’ve defaulted on payments, one last chance to recover their assets.
Statutory Right of Redemption
If your assets have already been sold off, you can reclaim them by offering to reimburse the buyer in full in the ‘Redemption Period’ that ensues after the sale of assets. Only certain states in the United State of America offer a ‘Redemption Period’ after foreclosure or sale of assets. As this right to a grace period after sale of the property to reclaim it stems from the state laws, it’s called the Statutory Right of Redemption.
Homeowners can continue to stay at their property during the ‘Redemption Period’ and also own the responsibility of paying utility bills, service bills, and insurance payments.
References for Redemption Period
Academic Research on Redemption Period
Stopping Short of Justice: Hamilton and Notice Requirements for the Redemption Period of Tax Sales, Gladney, J. (2007). Stopping Short of Justice: Hamilton and Notice Requirements for the Redemption Period of Tax Sales. La. L. Rev., 68, 263. This article sheds light on the unjustness of tax laws in relation to Redemption Periods and foreclosures.
Sheriff’s Deed Purchaser’s New Rights during Redemption Period, Lipski, T. (2015). Sheriff’s Deed Purchaser’s New Rights during Redemption Period. Mich. BJ, 94, 36. This article discusses the rights of new home owners over the property sold due to foreclosure, during the Redemption Period.
Should a Redemption Period Be Added to the Law, Smith Jr, C. F. (2002). Should a Redemption Period Be Added to the Law. Pa. B. Ass’n Q., 73, 42. This article discusses the addition of Statutory Right of Redemption to real estate laws in the state of Pennsylvania.
Agreements for Sale: Extending the Period of Redemption, Kirkham, B. Agreements for Sale: Extending the Period of Redemption. Advocate, 32. This paper discusses the implications of agreement cancellations by vendors in the event of borrowers defaulting on payment.
Bankruptcy-Johnson v. First National Bank of Montevideo: The Effect of Bankruptcy on a Statutory Redemption Period, Doyle, K. A. (1983). Bankruptcy-Johnson v. First National Bank of Montevideo: The Effect of Bankruptcy on a Statutory Redemption Period. Creighton L. Rev., 17, 1251. This paper discusses how bankruptcy affects Redemption Period with the case of Johnson v. First National Bank, in the USA.
A European redemption pact, Bofinger, P., Feld, L. P., Franz, W., Schmidt, C., & di Mauro, B. W. (2011). A European redemption pact. VoxEU, November, 9. This paper takes a look at the Redemption pact in light of the European debt crisis.
Redemption from Foreclosure Sale: The Uniform Mortgage Act, Durfee, E. N., & Doddridge, D. W. (1925). Redemption from Foreclosure Sale: The Uniform Mortgage Act. Michigan Law Review, 23(8), 825-869. This paper explores the Uniform Mortgage Act in detail with focus on foreclosure sales and property redemption.
The New Mortgage Foreclosure Law: Redemption and Reinstatement, Gnatek, C. A. (1989). The New Mortgage Foreclosure Law: Redemption and Reinstatement. U. Ill. L. Rev., 471. This paper sheds light on the legislation surrounding redemptions and reinstatements in the state of Illinois.
Recovery before redemption, Benjamin, D. (2008). Recovery before redemption. In 2008 Meeting Papers (No. 531). Society for Economic Dynamics. The paper examines the effectiveness of negotiations to reconstruct government debts before expiration of the Redemption Period.
Everyone believes in redemption: Nudges and overoptimism in costly task completion, Tasoff, J., & Letzler, R. (2014). Everyone believes in redemption: Nudges and overoptimism in costly task completion. Journal of Economic Behavior & Organization, 107, 107-122. This paper sheds light on the statistics around redemptions and proves that expected rates of redemption far exceed actual property redemptions.
Purchase and redemption patterns of US equity mutual funds, O’Neal, E. S. (2004). Purchase and redemption patterns of US equity mutual funds. Financial Management, 63-90. This paper looks at the redemption periods and purchase patterns in the United states equities and mutual funds market.
Redemption of Real Property Following Tax Sales in Alabama, Justice, W. R. (1980). Redemption of Real Property Following Tax Sales in Alabama. Cumb. L. Rev., 11, 331. This paper takes a critical look at the tax related foreclosures in the state of Alabama, and the eventual cases of property redemption.