The Right Of Redemption Before and After Foreclosure In Alabama
While many foreclosure laws are notoriously complicated, the notion of a ‘right of redemption’ often leaves then those well versed in the area scratching their heads in confusion. But do not fear; this article explains the need to know basics regarding the right of redemption in Alabama, and an experienced foreclosure attorney can explain the remaining details as they relate to your specific case. Essentially, the right of redemption is the right of a homeowner who is in danger of losing their home to foreclosure to redeem, or buy back, their home by paying a certain amount of money within a specified timeframe. While the right of redemption varies from state to state, in Alabama homeowners actually have two separate rights of redemption: an equitable right of redemption that exists before the foreclosure sale, and a statutory right of redemption that exists for a limited period of time after the property has been foreclosed on.
The Equitable Right of Redemption Before Foreclosure
In every state, borrowers have the equitable right to redeem their home before their property is sold at a foreclosure sale. In order to redeem their home and stop the foreclosure the owner generally must pay off the total amount that they owe on their home, plus additional costs and interest. The equitable right of redemption acts as a second chance for borrowers to save their home from foreclosure after they have fallen behind on their mortgage payments.
The Statutory Right of Redemption After Foreclosure
While every state affords homeowners the equitable right to redeem their home before the foreclosure sale, not all states allow redemption to occur after the foreclosure sale has taken place. States that do provide a right of redemption after foreclosure, such as Alabama, each have a statute on their books that affords homeowners within the state this right. This right allows a person to buy back their home after it has been sold at a foreclosure sale by paying the price that the new owner paid for the property, plus additional costs.
How long an owner’s statutory right of redemption exists varies greatly between states. In some states the right lasts for only one month while in other states the right lasts for a couple of years. Alabama’s statutory right of redemption, contained in the Code of Alabama §§ 6-5-247 to 6-5-257, is generally available for 180 days after the foreclosure sale for residential properties that qualify as a homestead, and for one year for non-homestead residential properties and commercial properties. Here, it is important to note that this 180-day window is provided for mortgages executed after January 1st, 2016, pursuant to a change in law; all others executed before that date are granted one year. Be warned that these timeframes can change given the circumstances of the foreclosure. For example, if a property in Alabama is sold at a foreclosure sale and the original owner fails to vacate the premises within 10 days of receiving a written demand to do so from the new owner, the original owner may lose their statutory right of redemption. Other actions can also cause the right of redemption period to change so it is always advisable to consult with a competent foreclosure attorney to discuss your legal rights and options.
What If I Buy A Foreclosed Property And Then The Previous Owner Exercises Their Right Of Redemption?
If you are considering purchasing a foreclosed property in Alabama it is very important to remember that the original owner may choose to exercise their statutory right of redemption after you buy the property. While this isn’t terribly common, if it does happen then you will be reimbursed the amount of money that you paid at the foreclosure sale, plus various other costs such as interest, taxes that you have paid on the property, and the value of any improvements that you made to the property. You will then be forced to convey the property back to the party who exercised their right of redemption.
Need Legal Advice?
Cloud Willis & Ellis, LLC helps lenders throughout Alabama and Georgia comply with all applicable laws and procedures while foreclosing on both residential and commercial properties. Our experienced foreclosure attorneys are happy to help and can be reached at either our Birmingham office (205-322-6060) or our Mobile office (251-545-4844).