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Redemption
The right of a defaulted borrower or contract for deed buyer to pay the full balance and recover the property, exercised before or after foreclosure depending on state law.
In depth
Redemption rights vary by state and timing. Equitable redemption applies before foreclosure sale and requires payoff of the entire loan. Statutory redemption, available in many states, lets a foreclosed-out owner buy the property back from the foreclosure sale buyer for the sale price plus costs, often within 6 to 12 months after sale. Misconception: redemption is not reinstatement; redemption requires the full balance, while reinstatement only requires arrears. Practically, statutory redemption is a major consideration for foreclosure sale buyers, who may not get clear title until the redemption period expires. Seller-finance investors targeting note acquisition should understand redemption rights in the underlying state. Some states have eliminated statutory redemption to encourage foreclosure sale bids.
Educational content only. Definitions reflect typical usage in US owner-finance and FSBO transactions; statutes and case law vary by state. Consult a licensed real-estate attorney for fact-specific guidance.