Rights of Redemption

A Right of Redemption is an ability, within a statutorily specified time period following the foreclosure sale, to take title away from the foreclosure purchaser by reimbursing his purchase price, plus interest. If a right of redemption exists, an exception must be included in Schedule B. In many states title does not vest until the redemption period has lapsed. Therefore, title may not be marketable. 


Rights of Redemption are held in various jurisdictions by the foreclosed-out borrower and junior lien creditors, and in other jurisdictions they have been entirely abolished. In some jurisdictions, these rights can be waived, but in many places, any attempt to waive a right of redemption is invalid. 


In any foreclosures divesting a junior United States lien arising under the Internal Revenue laws, the United States holds a Right of Redemption of either 120 days from the date of sale or the time permitted for redemption under local law, whichever is longer. As stated previously, proof of personal service of notice of the foreclosure to the Director of the IRS is required. If the junior United States lien arises under a law other than the Internal Revenue code, the Redemption period is one year from the date of sale. The United States can specifically waive its redemption rights by executing a proper form. Any questions as to waiver of Rights of Redemption should be directed to company counsel.