What is a Redemption Period?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 07 December 2019
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A redemption period is the time frame during which a debtor can retire a debt in default by paying off the entire amount due, including any legal fees or other expenses incurred by the creditor as a result of the default. Taking advantage of this period has several benefits for the debtor, including limiting the generation of any additional costs associated with the default and minimizing the damage to his or her credit rating. It is not unusual for purchase agreements and contracts to include terms and provisions that outline the essentials of the redemption period. In addition, local laws may come into play when it comes to protecting the rights of both the buyer and the seller when the possession or property sold is placed into question as the result of a default.

In recent times, the concept of a redemption period has also come to be identified with a window of opportunity regarding domain names for web sites. In the event that a domain name is allowed to expire, the original owner has a limited amount of time to recover ownership of that name. Once the period of redemption is expired, the name is available to anyone who wishes to purchase it, and use it in any way they like.


One of the most common examples of the use of a redemption period is in the real estate industry. Many jurisdictions have specific laws that determine the specifics of the redemption period, as it relates to the foreclosure process. The actual commencement of the period begins when the debtor is officially declared to be in default. From that point, the period of redemption may last for anywhere from a few days to a few months, depending on how the laws are written.

Regardless of the length of the redemption period, the idea behind this type of delay between default and foreclosure serves two purposes. First, the debtor is given an opportunity to make good on the outstanding debt. This includes paying any legal fees or other costs the creditor has incurred while attempting to work with the debtor. If the borrower can come up with the money to retire the debt, he or she can maintain possession of the property. If not, the period gives the borrower a short period of time to find somewhere else to live, and remove his or her possessions from the premises. Should the borrower fail to come to terms with the creditor, and does not vacate the premises by the end of the redemption period, eviction proceedings usually follow in short order.

Since the exact terms of the redemption period vary greatly from one jurisdiction to the next, it is important for anyone who finances a major purchase to understand the nature of the applicable laws as they currently stand in that jurisdiction. Along with reading the terms and provisions regarding foreclosure that are found in the mortgage contract, homeowners should also look closely at what is found in local laws. While the majority of people enter into these transactions with no intent to default at any point in time, understanding those laws can make it much easier to deal with situations where a job loss or an extended illness interfere with the ability to make timely payments on the debt.


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