When a mortgaged property is foreclosed and sold, the law often gives the mortgagor a chance to recover it by redemption, but the rules differ by the type of foreclosure and the mortgagee. There are two related concepts. Equity of redemption is the right of the mortgagor, in a judicial foreclosure, to pay the debt and redeem the property within the period fixed by the court (generally not less than 90 days from the entry of judgment) and before the foreclosure sale is confirmed; it is the right to prevent the sale from becoming final by paying up. Right of redemption is the right to buy back the property after the foreclosure sale, within a period fixed by law. In extrajudicial foreclosure (under Act No. 3135), the mortgagor generally has a right of redemption of one year from the registration of the certificate of sale. In judicial foreclosure, there is generally no right of redemption after the sale is confirmed (only the equity of redemption before confirmation), except when the mortgagee is a bank, in which case special banking laws grant a redemption period. The redemption price generally consists of the purchase price at the foreclosure sale plus interest and certain assessments and expenses. If the property is not redeemed within the period, the buyer consolidates ownership and may obtain a new title. So a foreclosed owner is not always without recourse — redemption may still recover the property if exercised on time and at the correct price.
Two Concepts
- Equity of redemption — in judicial foreclosure, pay the debt and redeem before the sale is confirmed (period fixed by the court); and
- Right of redemption — buy back the property after the sale, within a period fixed by law.
The Periods
In extrajudicial foreclosure (Act 3135), the mortgagor generally has one year from registration of the certificate of sale. In judicial foreclosure there is generally no redemption after confirmation — except when the mortgagee is a bank, which triggers a special redemption period.
Price and Consequence
The redemption price is generally the purchase price plus interest and certain charges. If not redeemed in time, the buyer consolidates ownership and gets a new title.
Practical Takeaways
- Extrajudicial foreclosure gives generally one year to redeem;
- Judicial foreclosure gives only the equity of redemption before confirmation (bank mortgagees excepted);
- Redeem on time and at the right price, or ownership consolidates.
Frequently Asked Questions
What is the difference between equity and right of redemption? Equity of redemption is the right in judicial foreclosure to pay and redeem before the sale is confirmed. Right of redemption is the right to buy back the property after the foreclosure sale, within a period fixed by law.
How long do I have to redeem an extrajudicially foreclosed property? Generally one year from the registration of the certificate of sale, under Act No. 3135 governing extrajudicial foreclosure.
Is there redemption after a judicial foreclosure? Generally no right of redemption after the sale is confirmed, only the equity of redemption before confirmation, except when the mortgagee is a bank, in which case special banking laws grant a redemption period.
How much is the redemption price? Generally the purchase price at the foreclosure sale plus interest and certain assessments and expenses. If not redeemed in time, the buyer consolidates ownership.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
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