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Foreclosure Legal Information > Redemption Right in Foreclosure Process

Redemption Right in Foreclosure Process

If you are investing in foreclosure properties, you need to know about redemption right of homeowner facing foreclosure. You may lose the foreclosure property that you bought if you do not pay attention to your state’s foreclosure practices in general, and loan documents in particular.

Foreclosure homes subject to redemption

Redemption is a major threat in buying properties foreclosed by banks and other lenders.  As a foreclosure home buyer you are more or less protected depending on the state you live.


Caution: You need to find out whether the foreclosure property that you intend to buy is subject to judicial foreclosure or non-judicial foreclosure sale procedure even if you live in a state where judicial or non-judicial foreclosure is dominant. Some banks and lenders may not have a “power of sale” clause even if this makes foreclosure sale easier for them. In short, do not rely on general practice in your state and seek specific wording.

Beware of other foreclosure investors during redemption period

Right after you buy the foreclosed property, some sneaky foreclosure investors may convince the homeowner stating that you bought the property at significantly low price. If they succeed, homeowner may exercise redemption right to pay back the money that you paid for the property and repossess the foreclosure house.


Many foreclosure home buyers prefer to stay away from the homeowner in the last one of redemption period.

Redemption right should not prevent you, an honest foreclosure investor from making lucrative deals

Here are the scenarios:

You may hear about another type of redemption. This one is related to federal (Internal Revenue Service - IRS) tax liens that has 120-day waiting or redemption period. Your foreclosure property title clears after this 120-day period. So, don't get surprised if your title insurance company excludes or waits for such redemption.