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The right of redemption is a law that relates to the reclamation of real property after that property has been foreclosed. In jurisdictions where this law is recognized, the debtor is provided with a specified period of time to regain control of the property by paying off the balance owed on the asset. In some areas, this figure includes not only the balance owed on the property itself, but all costs associated with the foreclosure and any outstanding taxes.
In most cases, a right of redemption is extended only for assets that are considered real property. Typically, real property is defined as land and any buildings that reside on that land. Both residential and commercial properties fall into this category of real estate. There are also jurisdictions where mobile homes also qualify as real property.
With a right of redemption, a debtor has the ability to regain control of property he or she lost due to a foreclosure. For a limited period of time after the foreclosure begins, the debtor can take steps to pay off all debts associated with the title to the property. Once the total debt is satisfied, the court of jurisdiction is notified and the property is returns to the possession of the debtor, who becomes the property owner of record.
There is some variance in how long the debtor has the option of claiming this right of redemption. In some areas, he or she can exercise that right up to the time that the property is offered through a public auction. There are some jurisdictions that place time limits on exercising this right, with the period beginning on the date that the foreclosure is filed. Depending on the laws that govern the foreclosure process in the location where the property is located, this can mean the debtor has anywhere from a few weeks to several months to raise the capital needed to retire the debt and regain possession of the property.
While there are exceptions, it is often difficult to claim a right of redemption and then arrange a new schedule of payments with the lender in order to reclaim the lost property. More often, the debtor secures financing from another source, arranges for full payment to be forwarded to the previous lender, and pledges the reacquired property as collateral for the new financing. This can be a difficult process if the foreclosure occurred due to a job loss or some other factor that inhibits the ability of the debtor to manage a regular schedule of payments.
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