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Redemption Period - Explained

What is a Redemption Period?

Written by Jason Gordon

Updated at April 15th, 2022

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Table of Contents

What is a Redemption Period?What are the Types of Redemption Period?Equitable Right of Redemption Statutory Right of RedemptionAcademic Research on Redemption Period

What is a Redemption Period?

The time duration offered to borrowers, during or even after a foreclosure in some cases, to return the borrowed money - pay off the debt owed to the investors, and reclaim their assets, is called the Redemption Period in Real Estate Foreclosures. 

It's also a term used for online properties like website addresses. Owners can reclaim their website domain for a period of 30 days after the yearly subscription has expired. Once this grace period is over, a Redemption Period of 30 days begins when the owner can reclaim the domain for an additional fee. This is very distinct from real estate Redemption Period.

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What are the Types of Redemption Period?

Equitable Right of Redemption 

A grace period to redeem a property or other assets like securities is offered to borrowers before an event like a foreclosure. If your assets are in the danger of being sold off to recover the debts you owe, you can block this sale by paying off the entire debt inclusive of the down payment, interests accrued, collateral damages, late payment fee, and transactional costs - also known as the Cost to Redeem, before the expiry of this grace period. 

Cost to Redeem can be found out by requesting the Pay Off quote from the servicer. This Redemption Period is an equitable principle to allow borrowers, even those whove defaulted on payments, one last chance to recover their assets. 

Statutory Right of Redemption

If your assets have already been sold off, you can reclaim them by offering to reimburse the buyer in full in the Redemption Period that ensues after the sale of assets. Only certain states in the United State of America offer a Redemption Period after foreclosure or sale of assets. As this right to a grace period after sale of the property to reclaim it stems from the state laws, it's called the Statutory Right of Redemption. Homeowners can continue to stay at their property during the Redemption Period and also own the responsibility of paying utility bills, service bills, and insurance payments.

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