equity of redemption


Also found in: Dictionary, Financial, Wikipedia.

Equity of Redemption

The right of a mortgagor, that is, a borrower who obtains a loan secured by a pledge of his or her real property, to prevent foreclosure proceedings by paying the amount due on the loan, a mortgage, plus interest and other expenses after having failed to pay within the time and according to the terms specified therein.

This right is based upon the equitable principle that it is only fair that a borrower have a final opportunity to keep his or her property even if he or she has failed to make payments on the mortgage, since the property is to be sold in foreclosure proceedings.

The equity of redemption must be exercised by a mortgagor within a certain time after having defaulted on an obligation. It exists only from the time of default to the time that fore-closure proceedings are commenced.

equity of redemption

n. the right of a mortgagor (person owing on a loan or debt against their real property), after commencement of foreclosure proceedings, to "cure" his/her default by making delinquent payments. The mortgagor also must pay all accumulated costs as well as the debt and interest to keep the property. (See: foreclosure, mortgage, redemption)

equity of redemption

the right or interest of a mortgagor of property to redeem while the mortgage subsists.

EQUITY OF REDEMPTION. A right which the mortgagee of an estate has of redeeming it, after it has been forfeited at law by the non-payment at, the time appointed of the money secured by the mortgage to be paid, by paying the amount of the debt, interest and costs.
     2. An equity of redemption is a mere creature of a court of equity, founded on this principle, that as a mortgage is a pledge for securing the repayment of a sum of money to the mortgagee, it is but natural justice to consider the ownership of the land as still vested in the mortgagor, subject only to the legal title of the mortgagee, so far as such legal title is necessary to his security.
     3. In Pennsylvania, however, redemption is a legal right. 11 Serg. & Rawle, 223.
     4. The phrase equity of redemption is indiscriminately, though perhaps not correctly applied, to the right of the mortgagor to regain his estate, both before and after breach of condition, In North Carolina by statute the former is called a legal right of redemption; and the latter the equity of redemption, thereby keeping a just distinction between these estates. 1 N. C. Rev. St. 266; 4 McCord, 340.
     5. Once a mortgage always a mortgage, is a universal rule in equity. The right of redemption is said to be as inseparable from a mortgage, as that of replevying from a distress, and every attempt to limit this right must fail. 2 Chan. Cas. 22; 1 Vern. 33, 190; 2 John. Ch. R. 30; 7 John. Ch. R. 40; 7 Cranch, R. 218; 2 Cowen, 324; 1 Yeates, R. 584; 2 Chan. R. 221; 2 Sumner, R. 487.
     6. The right of redemption exists, not only in the mortgagor himself, but in his heirs, and personal representatives, and assignee, and in every other person who has an interest in, or a legal or equitable lien upon the lands; and therefore a tenant in dower, a jointress, a tenant by the curtesy, a remainder-man and a reversioner, a judgment creditor, and every other incumbrancer, unless he be an incumbrancer pendente lite, may redeem. 4 Kent, Com. 156; 5 Pick. R. 149; 9 John. R. 591, 611; 9 Mass. R. 422; 2 Litt. R. 334; 1 Pick. R. 485; 14 Wend. R. 233; 5 John. Ch. R. 482; 6 N. H. Rep. 25; 7 Vin. Ab. 52. Vide, generally, Cruise, Dig. tit. 15, c. 3; 4 Kent, Com. 148; Pow. on Mortg. eh. 10 and 11; 2 Black. Com. 158; 13 Vin. Ab. 458; 2 Supp. to Ves. Jr. 368; 2 Jac. & Walk. 194, n.; 1 Hill. Ab. c. 31; and article Stellionate.

References in periodicals archive ?
In Part III, we learned that where a junior lienor purchases the land at a foreclosure of a senior mortgage, normal priority rules govern and the purchaser takes title free and clear of the interests of the holder of the equity of redemption and other junior interests.
In Part II of this article we discovered that when the holder of the equity of redemption directly or indirectly purchases at either a mortgage sale or tax sale, survival or revival of junior liens and other junior interests is the norm.
The foregoing right to 'pay late' became known as the mortgagor's equity of redemption.
When this occurs, the transferee becomes the new holder of the equity of redemption.
Leffingwell, Annotation, Right of Mortgagor or Purchaser of Equity of Redemption to Defeat Lien of Mortgage by Acquisition of Title at Sale Subsequent to Mortgage for Nonpayment of Taxes, or of Assessment for Local Improvement, 134 A.
However, unless a mortgagee who purchases at a foreclosure sale knows or suspects that former holder of the equity of redemption will likely attempt later to repurchase the land from it, it certainly acquired the title as a BFP.
The claim of the foreclosed mortgagor or the owner of the equity of redemption normally is junior to those of all valid liens wiped out by the foreclosure").
Where this is the case and the assuming junior lienor purchases at the foreclosure sale of the senior lien, it would inequitable to hold that the mortgagor's equity of redemption has been terminated.
c (1997): a purchase by a junior lienor or other junior interest at a validly conducted foreclosure of a senior lien cuts off the rights of both the holder of the equity of redemption and other junior interests as well.